All Research

M.S.M Khair-Afham · Anitha Rosland ·International Journal of Economics and Management ·2022 ·JEL: E44, E51

This study has examined the impacts of credit supply shocks and other common economic shocks (aggregate demand & supply and monetary shocks) on Malaysia's macroeconomic variables, using the Bayesian structural vector autoregressive (SVAR) model and employing sign restrictions. The results showed that an expansionary credit supply shock positively affected the Malaysian economy, consistent with the existing literature. Based on the variance decomposition finding, credit supply shocks explained a significant portion of the anticipated variation in the GDP growth, inflation, and, most importantly, credit growth in Malaysia. This study further decomposed total private non-financial corporate loans into two components: households and non-financial firms. Unlike other economies that have extensively researched this subject matter (US, UK, Euro Area), the growth rate of households and non-financial firms differed greatly in Malaysia. The empirical findings revealed considerable distinctions between these two components, indicating that different treatments or policy formulations are required rather than employing the same policy to boost or govern Malaysia's credit market

Fazelina Sahul Hamid · Muhamed Zulkhibri ·Institutions and Economies ·2019 ·JEL: E44; E52

This paper examines the effectiveness of bank lending channels in ASEAN countries. The main objective of this paper is to identify whether the effectiveness of bank lending channels in ASEAN differs based on the countries’ financial structure, banks’ fundamentals and ownership type. The study makes use of unbalanced panel data of 214 commercial banks in nine ASEAN countries for the period from 2001 to 2015. Analysis using dynamic GMM estimators finds that the bank lending channel is more effective in CLMV countrieswhich have a less-developed financial sector compared to ASEAN-5 countries which have a moredeveloped financial sector. Particularly, we find that smaller banks with less liquidity have a broader scope to expand their financing portfolios when interest rates rise. We also find that foreign banks in ASEAN-5 countries andstate-owned banks in ASEAN countries weaken the effect of monetary policy transmissions. However, local banks are vulnerable to changes in monetary policy. Further analyses confirm that the influence of ownership structure on credit growth is partly driven by the differences in the banks’ specific characteristics.Our findings suggest that theeffectiveness of bank lending channel depends on financial structure, bank fundamentals and ownership structure. The regulators need to take this into account to ensure that the changes in monetary policy achieve the desired objectives.

Abdelkader O.El Alaoui · Hashim Bin Jusoh · Sheila Ainon Yussof · Mohamed Hisham Hanifa ·Quarterly Review of Economics and Finance ·2019

This paper, for the best of our knowledge, is the first attempt to assess the role of money in the Malaysian economy using wavelet techniques. To do so, a macroeconomic model-based policy rules has been formulated. In relation with the recurring financial crises, we analyse the relationship between the quantity of money, interest rate, inflation, exchange rate, index of industrial production and equity indices, in the case of Malaysia. In this analysis, UK economy aggregates are taken as benchmark. Therefore, the relationships between monetary policy variables and macroeconomic variables are evolving with time and have non-homogeneous trends across different time scales. Some strong correlations have been found in regard to Malaysian Monetary Policy using, major monetary aggregates; the quantity of Money, the interest rate and the exchange rate inducing some lead-lag interactions between those key variables. In addition, we analyse the effect of LIBOR on Malaysian interest rate (KLIBOR). We found that the KLIBOR is lagging behind the LIBOR in most of the time. In the end, some lessons will be drawn for the monetary policy in Malaysia, in terms of the high impact of the role of money and the expected implications regarding an effective Islamic monetary policy.

Chai-Thing Tan · Azali Mohamed · Muzafar Shah Habibullah · Lee Chin ·South Asian Journal of Macroeconomics and Public Finance ·2020 ·JEL: E52, E58, E62, C01

This article analyses the impact of monetary and fiscal policies on economic growth in Malaysia, Singapore and Thailand from 1980:Q1 to 2017:Q1. Autoregressive distributed lag (ARDL) approach is employed to determine the long-run relationship. Further, a range of econometric models, such as fully modified least squares method (FMOLS), canonical cointegration regression (CCR) and dynamic ordinary least squares method (DOLS), are applied to check the robustness. The results are stable and robust as all the models yield consistency result. The main findings in this study demonstrate that: (a) interest rate had a negative impact on economic growth in three selected countries.