Bank, stock market, and economic growth in Malaysia
Bank plays an important role in an economy through channelling funds from savers to investors. This would generate more savings. consumptions. and investments. and resulting in greater efficiency and productivity. more output. and higher rate of economic growth. Thus, a well-developed banking syste...
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| Format: | Research Report |
| Language: | English English |
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Universiti Malaysia Sabah
2009
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| Online Access: | https://eprints.ums.edu.my/id/eprint/23397/1/Bank%2C%20stock%20market%2C%20and%20economic%20growth%20in%20Malaysia.pdf https://eprints.ums.edu.my/id/eprint/23397/7/Bank%2C%20stock%20market%2C%20and%20economic%20growth%20in%20Malaysia.pdf |
| _version_ | 1825713696317374464 |
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| author | Wong, Hock Tsen Kok, Sook ching Cheuk, Sharon Choy Sheung Rem Ali Yusoff |
| author_facet | Wong, Hock Tsen Kok, Sook ching Cheuk, Sharon Choy Sheung Rem Ali Yusoff |
| author_sort | Wong, Hock Tsen |
| collection | UMS |
| description | Bank plays an important role in an economy through channelling funds from savers to investors. This would generate more savings. consumptions. and investments. and
resulting in greater efficiency and productivity. more output. and higher rate of economic growth. Thus, a well-developed banking system could contribute significantly to
economic growth. Stock market may promote economic growth. Stock market encourages specialisation and also acquisition and dissemination of information and may reduce the costs of mobilising savings and thus facilities investment. Moreover, a well developed stock market may enhance corporate control by mitigating the principle-agent problem through aligning the interest of managers and owners. The role of financial
system on economic growth, particularly bank and stock market are well documented in the empirical literature. However, most of the studies in the literature are on developed
countries. In Malaysia, a few studies on the relationship between economic growth and both financial market and financial intermediary have been done previously. This study
examines banking development and stock market development on economic growth in Malaysia over the period from 1970 to 2006 and a sub-period from 1970 to 1996. The results show that there is a long-run relationship among real gross domestic product (GOP) per capita, capital, labour, openness to international trade, banking development, and stock market development. An increase in capital, labour, openness to international trade, banking development or stock market development will lead to an increase in real GOP per capita. Moreover, these variables are generally found to be important in influencing real GOP per capita in the short run. There is some evidence stock market development to have a stronger impact on real GOP per capita than banking development
in the long run. The results of Granger causality test show that there is some evidence that real GOP per capita Granger causes banking development and stock market development and not vice versa. On the whole, banking development and stock market development are important to economic growth in Malaysia. |
| first_indexed | 2024-03-06T03:00:33Z |
| format | Research Report |
| id | ums.eprints-23397 |
| institution | Universiti Malaysia Sabah |
| language | English English |
| last_indexed | 2024-03-06T03:00:33Z |
| publishDate | 2009 |
| publisher | Universiti Malaysia Sabah |
| record_format | dspace |
| spelling | ums.eprints-233972020-08-27T07:59:23Z https://eprints.ums.edu.my/id/eprint/23397/ Bank, stock market, and economic growth in Malaysia Wong, Hock Tsen Kok, Sook ching Cheuk, Sharon Choy Sheung Rem Ali Yusoff HG Finance Bank plays an important role in an economy through channelling funds from savers to investors. This would generate more savings. consumptions. and investments. and resulting in greater efficiency and productivity. more output. and higher rate of economic growth. Thus, a well-developed banking system could contribute significantly to economic growth. Stock market may promote economic growth. Stock market encourages specialisation and also acquisition and dissemination of information and may reduce the costs of mobilising savings and thus facilities investment. Moreover, a well developed stock market may enhance corporate control by mitigating the principle-agent problem through aligning the interest of managers and owners. The role of financial system on economic growth, particularly bank and stock market are well documented in the empirical literature. However, most of the studies in the literature are on developed countries. In Malaysia, a few studies on the relationship between economic growth and both financial market and financial intermediary have been done previously. This study examines banking development and stock market development on economic growth in Malaysia over the period from 1970 to 2006 and a sub-period from 1970 to 1996. The results show that there is a long-run relationship among real gross domestic product (GOP) per capita, capital, labour, openness to international trade, banking development, and stock market development. An increase in capital, labour, openness to international trade, banking development or stock market development will lead to an increase in real GOP per capita. Moreover, these variables are generally found to be important in influencing real GOP per capita in the short run. There is some evidence stock market development to have a stronger impact on real GOP per capita than banking development in the long run. The results of Granger causality test show that there is some evidence that real GOP per capita Granger causes banking development and stock market development and not vice versa. On the whole, banking development and stock market development are important to economic growth in Malaysia. Universiti Malaysia Sabah 2009 Research Report NonPeerReviewed text en https://eprints.ums.edu.my/id/eprint/23397/1/Bank%2C%20stock%20market%2C%20and%20economic%20growth%20in%20Malaysia.pdf text en https://eprints.ums.edu.my/id/eprint/23397/7/Bank%2C%20stock%20market%2C%20and%20economic%20growth%20in%20Malaysia.pdf Wong, Hock Tsen and Kok, Sook ching and Cheuk, Sharon Choy Sheung and Rem Ali Yusoff (2009) Bank, stock market, and economic growth in Malaysia. (Unpublished) |
| spellingShingle | HG Finance Wong, Hock Tsen Kok, Sook ching Cheuk, Sharon Choy Sheung Rem Ali Yusoff Bank, stock market, and economic growth in Malaysia |
| title | Bank, stock market, and economic growth in Malaysia |
| title_full | Bank, stock market, and economic growth in Malaysia |
| title_fullStr | Bank, stock market, and economic growth in Malaysia |
| title_full_unstemmed | Bank, stock market, and economic growth in Malaysia |
| title_short | Bank, stock market, and economic growth in Malaysia |
| title_sort | bank stock market and economic growth in malaysia |
| topic | HG Finance |
| url | https://eprints.ums.edu.my/id/eprint/23397/1/Bank%2C%20stock%20market%2C%20and%20economic%20growth%20in%20Malaysia.pdf https://eprints.ums.edu.my/id/eprint/23397/7/Bank%2C%20stock%20market%2C%20and%20economic%20growth%20in%20Malaysia.pdf |
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