Determinants and Transmission Channel of External Debt: Evidence from Malaysia

Udoh, Enobong; Rafik, Rabiatul Adawiyah Mohamed

doi:10.9734/ajeba/2017/35031

Cited by 6 publications

(5 citation statements)

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“…The value of the debt increases as a result of the depreciation (rise in the exchange rate) of the domestic currency. Past studies, such as Udoh and Rafik (2017) and Adamu (2019), have reported a similar relationship.…”

Section: Estimated Short-and Long-run Resultssupporting

confidence: 56%

“…With regard to importing countries, the results indicated that economic growth and gross domestic savings reduce external debt, while trade deficit, price of oil, interest payment on external debt, foreign direct investment, and domestic investment increase external debt. Applying the vector error correction model to a dataset spanning the period 1970-2013, Udoh and Rafik (2017) showed that capital expenditure increases external debt, whereas economic growth reduces it for the case of Malaysia. Lau, Lee, and Apir (2015) also reported a similar finding for Malaysia.…”

Section: Empirical Reviewmentioning

confidence: 99%

“…Common determinants of external debt reported in existing literature are economic growth, imports, population, foreign exchange reserves, total debt service, poverty, income instability, depreciation of the currency, budget deficit, exchange rate, trade openness, terms of trade, inflation, interest rate, national savings, and financial development (Abdullahi, Bakar, and Hassan 2015;Bittencourt 2015;Lau, Lee, and Apir 2015;Vighneswara 2015;Lau and Lee 2016;Al-Fawwaz 2016;Belguith and Omrane 2017;Özata 2017;Udoh and Rafik 2017;Chiminya, Dunne, and Nikolaidou 2018;Chirwa and Odhiambo 2018;Adamu 2019;Brafu-Insaidoo et al 2019;Fatukasi et al 2020). For instance, Vighneswara (2015) and Beyene and Kotosz (2020a) asserted that government expenditure is one of the key factors that increase external debt due to budget deficits, which compel governments to borrow.…”

Section: Introductionmentioning

confidence: 99%

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An empirical investigation into the determinants of external debt in Asian developing and transitioning economies

Dawood

Baidoo

Shah

2021

Development Studies Research

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This paper investigates the determinants of external debt in 32 Asian developing and transitioning economies for the period 1995-2019. Estimation is carried out using the generalized method of moments (GMM), which is capable of dealing with potential endogeneity problems. The results show that in both the short-and long-run, economic growth and investment reduce external debt, whereas exchange rate, trade, and government expenditure increase external debt. Diagnostic tests confirm the reliability and consistency of our findings, which should be taken into account by policymakers for policy formulation and implementation. Based on our empirical findings, relevant policy implications, aimed at reducing external debt in the selected Asian developing and transitioning economies, are provided for policy consideration.

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Section: Estimated Short-and Long-run Resultssupporting

confidence: 56%

Section: Empirical Reviewmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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An empirical investigation into the determinants of external debt in Asian developing and transitioning economies

Dawood

Baidoo

Shah

2021

Development Studies Research

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“…The devaluation of the domestic currency amplifies the value of the debt. As a result, EXR is a critical factor influencing EXD, which aligns with previous researches conducted by Udoh and Rafik (2017); Adamu (2019). Table 8 shows the results of the Granger causality test, which was carried out to establish a causal connection between the predictors.…”

Section: Resultssupporting

confidence: 79%

External Debt and Nigeria's Economic Growth: Determinants and Implications

Ademola¹

2023

j.financ.econ.res

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Nigeria's economy has been largely dependent on external borrowing, which has resulted in an increasing debt burden. Policymakers and economists have debated the influence of external debt on economic growth. Therefore, this study analyzed how external debt affects Nigeria's economic growth and explored the factors that determine external debt in the nation. The study utilizes an Ex Post Facto research design, and data from the Central Bank of Nigeria and the World Bank report from 1990 to 2020 was used. Vector error correction regression model, granger causality test, unit root and co-integration tests were employed for the analysis. Findings revealed that external debt servicing, exchange rate and external debt have significant but adverse effect on economic growth, confirming the debt overhang effect. However, external reserves portends positive and significant effect on GDP. Moreover, empirical results revealed that trade openness, government expenditure, inflation and exchange rates are salient factors that affect external debts in Nigeria. In terms of causality, all the tested variables have causal relationship with external debt. The study recommends that Nigeria government needs to adopt a sustainable borrowing and debt management strategy to avoid excessive external debt accumulation and its negative implications for the economy.

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“…Among the time-series studies that adopted Johansen Cointegration test and estimated a vector error correction model (VECM) were Bader and Magableh (2009); Awan et al (2011);Imimole et al (2014); Udoh and Rafik (2017); Adamu (2019).…”

Section: Empirical Evidencementioning

confidence: 99%

.An Econometric Analysis of the Macroeconomic Determinants of External Debt in Egypt.

Mohamed Youssef

2024

المجلة العلمية للدراسات التجارية والبيئية

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Determinants and Transmission Channel of External Debt: Evidence from Malaysia

Cited by 6 publications

References 0 publications

An empirical investigation into the determinants of external debt in Asian developing and transitioning economies

An empirical investigation into the determinants of external debt in Asian developing and transitioning economies

External Debt and Nigeria's Economic Growth: Determinants and Implications

.An Econometric Analysis of the Macroeconomic Determinants of External Debt in Egypt.

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