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Modelling the Determinants of Malaysian Household Debt

Author

Listed:
  • Hafizah Hammad Ahmad Khan

    (School of Economics, Finance and Banking, Universiti Utara Malaysia, 06010 Sintok, Kedah, Malaysia,)

  • Hussin Abdullah

    (School of Economics, Finance and Banking, Universiti Utara Malaysia, 06010 Sintok, Kedah, Malaysia,)

  • Shamzaeffa Samsudin

    (School of Economics, Finance and Banking, Universiti Utara Malaysia, 06010 Sintok, Kedah, Malaysia.)

Abstract

This paper explores the determinants of household debt composition in Malaysia. By utilizing the bound test and autoregressive distributed lag modelling approach, findings of this study reveals that in the long run period, a change in income level, housing price and population would have a positive impact on mortgage debt while rise in interest rates and cost of living would exert a negative influence. In addition, findings of this study supported that the household uses the debt as a substitute for income to finance the rising consumption because of a higher living cost. Findings of this study could provide some guidance to policymakers in controlling the mounting debt level and help in realizing the nation economic goals.

Suggested Citation

  • Hafizah Hammad Ahmad Khan & Hussin Abdullah & Shamzaeffa Samsudin, 2016. "Modelling the Determinants of Malaysian Household Debt," International Journal of Economics and Financial Issues, Econjournals, vol. 6(4), pages 1468-1473.
    • Handle: RePEc:eco:journ1:2016-04-26
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    References listed on IDEAS

    as
    1. George A. Akerlof, 2009. "How Human Psychology Drives the Economy and Why It Matters," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(5), pages 1175-1175.
    2. Christian Beer & Martin Schürz, 2007. "Characteristics of Household Debt in Austria," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 2, pages 58-79.
    3. John D. Benjamin & Peter Chinloy & G. Donald Jud, 2004. "Real Estate Versus Financial Wealth in Consumption," The Journal of Real Estate Finance and Economics, Springer, vol. 29(3), pages 341-354, November.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Agnieszka Strzelecka & Danuta Zawadzka, 2020. "Why Households Borrow Money? Socio-Economic Factors Affecting Households Debts: A Model Approach," European Research Studies Journal, European Research Studies Journal, vol. 0(Special 2), pages 820-839.
    2. Monika Gupta & Shubhi Bansal, 2020. "Covid-19 Disruption of Middle-Class Monthly Household Income and Budget," International Journal of Economics and Financial Issues, Econjournals, vol. 10(6), pages 10-17.
    3. Ján Buleca & Nikola Šubová & Lenka Malièká, 2022. "The Relationship between Household Wealth and Financial Vulnerability in the Post-communist Countries of the Euro Area," Journal of Economics / Ekonomicky casopis, Institute of Economic Research, Slovak Academy of Sciences, vol. 70(7-8), pages 569-588, July.
    4. El-Khalifa, Zainab Shawky & Zahran, Hoda Farouk & Ayoub, Ahmed, 2022. "Climate Change Factors' Impact on the Egyptian Agricultural Sector," Asian Journal of Agriculture and Rural Development, Asian Economic and Social Society (AESS), vol. 12(03), January.
    5. Collins C. Ngwakwe, 2024. "The Impact of Mortgage Rates on Mortgage Refinancing," International Journal of Economics and Financial Issues, Econjournals, vol. 14(2), pages 1-4, March.

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    More about this item

    Keywords

    Household Debt; Mortgage Debt; Consumer Debt; Bound Test; Auto-regressive Distributed Lag Modeling;
    All these keywords.

    JEL classification:

    • E00 - Macroeconomics and Monetary Economics - - General - - - General
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • G00 - Financial Economics - - General - - - General

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