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Time Series Analysis on Factors Influencing Saving Rate in Malaysia

Author

Listed:
  • Chen-Chen Yong
  • Kim-Lan Siah
  • Pei-Lee Teh
  • Keng-Boon Ool

Abstract

The validity of the assertion that high saving rates are associated with persistent high economic growth rates has become questionable after the onset of 1997/1998 Asian financial and economic crises. This paper aims to examine the factors influencing the saving rate of Malaysia as well as to reestimate the savings function in order to answer the question whether high saving rates are associated with Malaysia’s high rate of economic growth using a recently developed Bound testing approach proposed by Pesaran et al. (2001). The sample period runs from 1974-2004. The Autoregressive Distributed Lag (ARDL) model indicates that in the long-run, per capita GDP and per capita GDP growth rate have a positive impact on saving rates, while foreign saving and dependency ratio have a negative influence on saving. However, the interest rate is found to be insignificant on Malaysia’s saving rate.

Suggested Citation

  • Chen-Chen Yong & Kim-Lan Siah & Pei-Lee Teh & Keng-Boon Ool, 2008. "Time Series Analysis on Factors Influencing Saving Rate in Malaysia," The IUP Journal of Financial Economics, IUP Publications, vol. 0(4), pages 50-61, December.
    • Handle: RePEc:icf:icfjfe:v:06:y:2008:i:4:p:50-61
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    1. repec:agr:journl:v:2(602):y:2015:i:2(602):p:113-122 is not listed on IDEAS
    2. Muhammad Mahmud & Gobind M. Herani & Prof. A. W. Rajar, 2009. "Economic Factors Influencing Corporate Capital Structure in Three Asian Countries: Evidence from Japan, Malaysia and Pakistan," Indus Journal of Management & Social Science (IJMSS), Department of Business Administration, vol. 3(1), pages 9-17, June.
    3. Kivanç Halil ARIÇ, 2015. "Determinants of savings in the APEC countries," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(2(603), S), pages 113-122, Summer.
    4. Chor Foon Tang & Soo Y. Chua, 2012. "The savings-growth nexus for the Malaysian economy: a view through rolling sub-samples," Applied Economics, Taylor & Francis Journals, vol. 44(32), pages 4173-4185, November.
    5. Hunjra, Ahmed Imran & Bilal, Muhammad & Shafi, Haroon & Ullah, Ikram & Rehman, Kashif-Ur-, 2010. "Patterns of capital structure and dividend policy in Pakistani corporate sector and their impact on organization performance," MPRA Paper 40658, University Library of Munich, Germany.
    6. Samuel Nduati Kariuki & Charles Guandaru Kamau, 2014. "Determinants of Corporate Capital Structure among Private Manufacturing Firms in Kenya: A Survey of Food and Beverage Manufacturing Firms," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 4(3), pages 49-62, July.

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