EXTERNAL DEBT, INSTITUTIONAL QUALITY AND ECONOMIC GROWTH

This paper addresses the gap in the literature by investigating the role of the institutional quality in the nexus of external debt and economic growth. By employing a dynamic panel data analysis, we found that the institutional quality plays some role in complementing the effect of external debt on a country’s economic growth. We also found that the negative effect of external debt and a country’s economic growth monotonically increases with the level of institutional indicator, which implies the possibility of debt overhang may still happen in economies endowed with good institutions, but for higher values of debt

Macroeconomic Variables and Stock Prices in Malaysia : An Empirical Analysis from the Pre-and Post July 1997 Period

This paper aims to investigate the dynamic interaction between five macroeconomic variables and the stock prices during pre-and post financial crisis in July 1997. The macro variable consists of price level, money supply, total reserve, domestic credit aggregate and industrial production. The cointegration and causality Error Correction Model (ECM) were used in this study, to analyze the dynamic equilibrium in the shortrun and long-run between macroeconomic variables and the stock prices. Moreover, it established the short-run and long-run relationship among the variables in order to test the informational efficiency market hypothesis before and after the financial crisis. The result shows that Malaysian stock prices is informationally inefficient due to money supply, credit aggregate, total reserve, price level and the industrial production during the period before financial crisis. Meanwhile, period after the financial crisis suggest that Malaysian stock market still in its informational inefficient market prior to all variable except for the total reserve which indicate the long-run predictability of Malaysian equity prices. The Granger Causality test for the period before financial crisis found that credit aggregate and total reserve has short-run relationship with the stock prices. However for the period after the financial crisis, the result suggest that the short run relationship exist among the credit aggregate, price level, total reserve and industrial production with the stock price. As a conclusion, after some new policy implemented, Malaysian stock prices are still in the informationally inefficient behavior. In addition, investors can use this information to formulate some profitable trading and it may be useful for the policy maker in choosing, planning and implemented a new policy to stabilize and maintain our economic situation

The cost of international reserves and external debt: Evidence from Malaysia

This study aims to empirically examine the cost of Malaysia’s decision to jointly hold reserves and sovereign debt after the 1997 Asian financial crisis. This paper provides evidence that Malaysia should hold international reserves of at least 4.96 months of imports, which is higher than the conventional rule of thumb of 3 months of imports. However, in its current international reserves position Malaysia could finance 9.3 months of retained imports, which is far above the optimal level

Efficient market hypothesis in emerging markets: Panel data evidence with multiple breaks and cross sectional dependence

The purpose of this paper is to re-examine whether mean reversion property hold for 15 emerging stock markets for the period 1985 to 2006. Utilizing a panel stationarity test that is able to account for multiple structural breaks and cross sectional dependence, we find that the emerging stock markets follow a random walk process. However, further analysis on individual series show that the majority of stock prices in emerging markets are governed by a mean reverting process. This result, which is inconsistent with efficient market hypothesis, suggests that past information is useful in predicting future prices in most of the markets

Financialization, digital technology and income inequality

This paper investigates the impact of digital technology on the relationship between financialization and income inequality of 54 countries from 2010 to 2015. The results show that financialization and digital technology widen the income inequality gap. Therefore, policies should be centred primarily on eliminating obstacles and developing innovative products that focus on solutions to the low-income consumer problem and those who have been marginalized

Short and Long Term Relationship between Economic Growth and Unemployment in Egypt: An Empirical Analysis

This study aims to examine the relationship between growth and unemployment in Egypt between 2006 Q1 - 2013 Q2. The Dickey-Fuller (ADF) unit root test, the Johansen Co-integration test and the Standard Granger Causality test were applied to examine the relationship between unemployment and Gross Domestic Product (GDP). The results indicated there were no co-integration relationship between the variables of unemployment and GDP specifically implying there is no long-term relationship between the variables. However, in the short term, there is a direct causality relationship have been observed between the unemployment rate to economic growth. DOI: 10.5901/mjss.2015.v6n4s3p45

Sovereign credit ratings and macroeconomic variables: An application of bounds testing approach to Malaysia

This paper aims to investigate the short- and long-run macroeconomic determinants of sovereign credit ratings in developing countries.Malaysia is used as a case study.This study employed quarterly data from 1991 to 2004.We apply a recently developed time series technique called ‘Auto-Regressive Distributed Lag’ (ARDL) [Pesaran, Shin, and Smith,Journal of Applied Econometrics, 2001] which has taken care of a major limitation of the conventional cointegrating tests in that they suffer from the pre-test biases.Based on the above rigorous methodology, our evidence tends to suggest that both in the short-and long- run, Debt ratios such as (Debt to GDP, Debt Service to Reserve) and US Treasury Bill rate (3-months) appear to have had a significant impact on Malaysia’s sovereign credit ratings.The findings of the study tend to indicate that Malaysia’s short- and long-term ability to pay its debt contain information for the prediction of her credit ratings.These findings are plausible and have strong policy implications for developing countries like Malaysia

Energy futures price bubbles and asset co-movements with crude palm oil futures: through the lenses of geopolitical events and speculation

The important role played by energy markets has concerned investors regarding the market’s behaviour and interconnections when seeking asset diversification strategies, which has become critical in financial analysis. This study aimed to identify price bubbles in energy futures markets and asset co-movements with the crude palm oil futures market (FCPO). This study utilised five futures indices from January 2, 2001, to October 30, 2020. Three methods were employed to explain the behaviour of the energy futures markets: The Generalized Supremum Augmented Dickey-Fuller (GSADF) test, the wavelet power spectrum technique and the wavelet coherence method. The findings from the GSADF test revealed that all energy future markets indicated the presence of asset bubbles, which were influenced by geopolitical events and speculation. The study also demonstrated the presence of periods of high volatility across multiple horizons, which occasionally occurred around the same period as explosive price behaviour. The results of the wavelet coherence method showed that the FCPO market had high co-movement with the Brent crude oil (BRENT) and heating oil (HOIL) markets and, to a lesser extent, with the natural gas (NGAS) and light sweet crude oil (WTI) markets. By linking the GSADF and wavelet approaches, the present study showed how energy price bubbles, their volatility, and co-movements with the FCPO market were related in the presence of geopolitical events and speculation. The present study's findings have suggested strategies regulators and investors can use to manage investment risk and portfolio diversification

Macroeconomic determinants of corporate failures in Malaysia

This research investigates the long-run dynamic linkages between the corporate failures in Malaysia and selected macroeconomic variables by employing the Autoregressive Distributed Lag (ARDL) bound test, a robust and recent time series technique which is applicable irrespective of whether the regressors are I(0) or I(1).Corporate failure rate is the ex-ante variable in a linear function model with five explanatory macroeconomic variables. A dummy variable to decipher the corporate failure rates during the Asian financial crisis was also included. The results show that corporate failure rates in Malaysia are significantly and positively associated with the average lending rate, inflation rate and, gross domestic product (GDP) in the long-run

Review: Challenges and opportunities of implementing mass productivity scale (MPS) at date farms in Malaysia

The study aimed to review the challenges and opportunities of mass productivity scale (MPS) for the dates (Phoenix dactylifera L.) farm in Malaysia. The review on site and document was done to drill the issues faced by dates palm farmers. The common issues affecting dates farm in Malaysia were pest attack, import permit, lack of expertise, and climate and soil requirements. In a united response, the government should form the National Dates Palm Centre (NDPC) which will explore opportunities to address issues faced by the dates palm sector in Malaysia