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Capital Account Liberalization And Economic Performance In Malaysia

Author

Listed:
  • SIONG HOOK LAW

    (Department of Economics, Universiti Putra Malaysia, 43400 UPM Serdang, Selangor, Malaysia)

  • W. N. W. AZMAN-SAINI

    (Department of Economics, Universiti Putra Malaysia, 43400 UPM Serdang, Selangor, Malaysia)

Abstract
This study examines the impact of capital account liberalization on economic growth in Malaysia from 1970 to 2004. It uses two measures of capital account openness, namelyde jure(an index of liberalization) andde facto(the volume of capital flows). The empirical results based on the modified growth model demonstrate that thede juremeasure of capital account liberalization shows an adverse effect on growth in Malaysia. However, thede factomeasure shows a robust positive effect on economic growth. The results also highlight that the effect of capital account liberalization on growth is contingent on a country's level of financial development and the quality of its institutions.

Suggested Citation

  • Siong Hook Law & W. N. W. Azman-Saini, 2013. "Capital Account Liberalization And Economic Performance In Malaysia," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 58(03), pages 1-22.
    • Handle: RePEc:wsi:serxxx:v:58:y:2013:i:03:n:s0217590813500227
    DOI: 10.1142/S0217590813500227
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    References listed on IDEAS

    as
    1. M Ayhan Kose & Eswar Prasad & Kenneth Rogoff & Shang-Jin Wei, 2009. "Financial Globalization: A Reappraisal," IMF Staff Papers, Palgrave Macmillan, vol. 56(1), pages 8-62, April.
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    5. Ben S. Bernanke & Refet S. Gürkaynak, 2002. "Is Growth Exogenous? Taking Mankiw, Romer, and Weil Seriously," NBER Chapters, in: NBER Macroeconomics Annual 2001, Volume 16, pages 11-72, National Bureau of Economic Research, Inc.
    6. Eatwell, John & Taylor, Lance (ed.), 2002. "International Capital Markets: Systems in Transition," OUP Catalogue, Oxford University Press, number 9780195154986.
    7. Delano S Villanueva & Roberto S Mariano & Diwa C Guinigundo & Abbas Mirakhor, 2023. "Testing the Neoclassical Theory of Economic Growth: A Panel Data Approach," World Scientific Book Chapters, in: Economic Adjustment and Growth Theory and Practice, chapter 2, pages 10-43, World Scientific Publishing Co. Pte. Ltd..
    Full references (including those not matched with items on IDEAS)

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    Cited by:

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    2. Wu, Manhwa & Huang, Paoyu & Ni, Yensen, 2017. "Capital liberalization and various financial markets: Evidence from Taiwan," The Quarterly Review of Economics and Finance, Elsevier, vol. 66(C), pages 265-274.

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    More about this item

    Keywords

    Capital account openness; economic growth; institutions; financial development; bounds test; F43; O40;
    All these keywords.

    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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