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The Determinants of Household Debt in Malaysia

Author

Listed:
  • Norliza Che Yahya
  • Bushra Mohd Zaki
  • Nik Norain Izzati Nik Azid
  • Nur Fatihah Mohd Ali
  • Nor Amanie Najihah Hussain

Abstract

This study aims to observe the determinants of the factors affecting household debt in Malaysia. This study has listed six independent variables that would affect Malaysia’s household debt: real interest rate, inflation rate, unemployment rate, household consumption expenditure, gross domestic product (GDP), and housing price index (HPI). This research was conducted by using annual data for 30 years (1991-2021); this study also used a quantitative approach to the collection of data using secondary data such as the website of the World Bank, Department of Statistics Malaysia, Eikon Thomson Reuters, and Bank Negara Malaysia. A theoretical model with the hypothesized relationships was tested with the help of the structural equation modelling procedures. Findings showed that the unemployment rate and gross domestic product have a positive and significant relationship with household debt. These determinants are directly affecting household debt in Malaysia, especially in microeconomic factors. This study will contribute to a better understanding that household debt can be influenced by other factors. Further study on the other determinants of household debt may result in varying results.

Suggested Citation

  • Norliza Che Yahya & Bushra Mohd Zaki & Nik Norain Izzati Nik Azid & Nur Fatihah Mohd Ali & Nor Amanie Najihah Hussain, 2023. "The Determinants of Household Debt in Malaysia," Information Management and Business Review, AMH International, vol. 15(3), pages 183-194.
    • Handle: RePEc:rnd:arimbr:v:15:y:2023:i:3:p:183-194
    DOI: 10.22610/imbr.v15i3(I).3528
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    References listed on IDEAS

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    1. Suhal Kusairi & Suriyani Muhamad & M Musdholifah & Shu-Chen Chang, 2019. "Labor Market and Household Debt in Asia Pacific Countries: Dynamic Heterogeneous Panel Data Analysis," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 10(02), pages 1-15, June.
    2. Khairunnisa Abd Samad & Siti Nurazira Mohd Daud & Nuradli Ridzwan Shah Mohd Dali, 2020. "Determinants of household debt in emerging economies: A macro panel analysis," Cogent Business & Management, Taylor & Francis Journals, vol. 7(1), pages 1831765-183, January.
    3. T Bellotti & J Crook, 2009. "Credit scoring with macroeconomic variables using survival analysis," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 60(12), pages 1699-1707, December.
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    Cited by:

    1. Cloudio Kumbirai Chikeya & Lungile Ntsalaze, 2025. "Determinants of Household Debt: A Systematic Review of the Literature," Economies, MDPI, vol. 13(3), pages 1-36, March.

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