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The Impact of Domestic Public Debt on Financial Development in Malaysia

Author

Listed:
  • Mok Wei Mun
  • Normaz Wana Ismail

Abstract

When the government heavily borrows domestically from the banking sector to finance its expenditures, there is possibility that public debt will lead to a crowding out effect on private investment since bank credit is a primary funding source for the private sector. This study examines the linkages between domestic public debt and financial development in Malaysia for the period of 1980 to 2010. Our analysis suggests that domestic public debt from banks has a negative relationship with financial development. Meanwhile, the crowding out effect is evident during the occurrence of financial crises.

Suggested Citation

  • Mok Wei Mun & Normaz Wana Ismail, 2015. "The Impact of Domestic Public Debt on Financial Development in Malaysia," International Journal of Social Science Research, Macrothink Institute, vol. 3(2), pages 1-19, September.
    • Handle: RePEc:mth:ijssr8:v:3:y:2015:i:2:p:1-19
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    File URL: http://www.macrothink.org/journal/index.php/ijssr/article/view/7167/6135
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    File URL: http://www.macrothink.org/journal/index.php/ijssr/article/view/7167
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    Citations

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    Cited by:

    1. Qamar ABBAS & Muhammad RAMZAN & Sumbal FATIMA, 2022. "Financial development and public debt. Estimating the role of institutional quality," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(3(632), A), pages 5-26, Autumn.
    2. Liew Chung-Yee & Normaz Wana Ismail & Tan Ai-Lian, 2020. "Is Public Debt Asymmetrically Link to Financial Development in Malaysia?," Asian Journal of Empirical Research, Asian Economic and Social Society, vol. 10(3), pages 97-110, March.

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