Factors affecting accumulation of household debts in Malaysia


Lee, Yvonne Lean Ee and Charun, Vanisa Sukhavudh and Mohd Zaki, Hazmi Hamizan (2021) Factors affecting accumulation of household debts in Malaysia. International Journal of Management, Finance and Accounting, 2 (1). pp. 19-42. ISSN 2735-1009

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Since 2000, the ratio of debt to income among Malaysian households has been showing an upward trend. This paper examines the factors affecting accumulation of household loans into two main categories, housing loans and consumption loans. The purpose of this separation is to study the impact of savings on housing loans and consumption loans individually, which has not been researched in a Malaysian context prior to this. By adopting the Vector Error Correction Model (VECM), we found that cost of living, house prices and savings impacts accumulation of housing loans and consumption loans differently. There is a positive relationship between savings to housing loans. Cost of living on the other hand has a negative relationship with accumulation of consumption loans. House prices is negatively related to consumption loans. This study fills in the literature gap on the impact of household’s savings on accumulation of both housing and consumption loans. Among the policy implications proposed by this paper is to rectify and influence the root causes of inflation.

Item Type: Article
Uncontrolled Keywords: Household Debt, Housing Loans, Consumption Loans, Cost of Living, House Prices, Savings
Subjects: H Social Sciences > HG Finance > HG4001-4285 Finance management. Business finance.
Divisions: Faculty of Management (FOM)
Depositing User: Ms Nurul Iqtiani Ahmad
Date Deposited: 04 May 2021 19:03
Last Modified: 04 May 2021 19:03
URII: http://shdl.mmu.edu.my/id/eprint/8662


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