Shadow economy and financial sector development in Malaysia
This paper explores the link between the shadow economy and financial sector development in Malaysia for the period 1971-2013. We calculate the size of the shadow economy by using the modified-cash-deposits-ratio (MCDR) approach recently developed by Pickhardt and Sardia (2011). We investigate the c...
| Main Authors: | , , , |
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| Format: | Article |
| Language: | English |
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EconJournals
2016
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| Online Access: | http://psasir.upm.edu.my/id/eprint/53808/ http://psasir.upm.edu.my/id/eprint/53808/1/Shadow%20economy%20and%20financial%20sector%20development%20in%20Malaysia.pdf |
| _version_ | 1848852381386670080 |
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| author | Habibullah, Muzafar Shah Din, Badariah Saari, Mohd Yusof Abdul Hamid, Baharom |
| author_facet | Habibullah, Muzafar Shah Din, Badariah Saari, Mohd Yusof Abdul Hamid, Baharom |
| author_sort | Habibullah, Muzafar Shah |
| building | UPM Institutional Repository |
| collection | Online Access |
| description | This paper explores the link between the shadow economy and financial sector development in Malaysia for the period 1971-2013. We calculate the size of the shadow economy by using the modified-cash-deposits-ratio (MCDR) approach recently developed by Pickhardt and Sardia (2011). We investigate the contention made by Blackburn et al. (2012) that financial sector development can mitigate shadow economy – higher level of financial sector development lead to lower level of shadow economy. Our results show that there is a non-linear long-run relationship between shadow economy and financial sector development in Malaysia, an inverted-U shape curve, suggesting that at lower (higher) level of financial sector development commensurate with higher (lower) level of the shadow economy. One policy implication from this study is that the financial sector can play an important role in reducing shadow economy by improving the accessibility to financing and to the credit market. |
| first_indexed | 2025-11-15T10:37:10Z |
| format | Article |
| id | upm-53808 |
| institution | Universiti Putra Malaysia |
| institution_category | Local University |
| language | English |
| last_indexed | 2025-11-15T10:37:10Z |
| publishDate | 2016 |
| publisher | EconJournals |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | upm-538082018-02-06T02:25:37Z http://psasir.upm.edu.my/id/eprint/53808/ Shadow economy and financial sector development in Malaysia Habibullah, Muzafar Shah Din, Badariah Saari, Mohd Yusof Abdul Hamid, Baharom This paper explores the link between the shadow economy and financial sector development in Malaysia for the period 1971-2013. We calculate the size of the shadow economy by using the modified-cash-deposits-ratio (MCDR) approach recently developed by Pickhardt and Sardia (2011). We investigate the contention made by Blackburn et al. (2012) that financial sector development can mitigate shadow economy – higher level of financial sector development lead to lower level of shadow economy. Our results show that there is a non-linear long-run relationship between shadow economy and financial sector development in Malaysia, an inverted-U shape curve, suggesting that at lower (higher) level of financial sector development commensurate with higher (lower) level of the shadow economy. One policy implication from this study is that the financial sector can play an important role in reducing shadow economy by improving the accessibility to financing and to the credit market. EconJournals 2016 Article PeerReviewed application/pdf en http://psasir.upm.edu.my/id/eprint/53808/1/Shadow%20economy%20and%20financial%20sector%20development%20in%20Malaysia.pdf Habibullah, Muzafar Shah and Din, Badariah and Saari, Mohd Yusof and Abdul Hamid, Baharom (2016) Shadow economy and financial sector development in Malaysia. International Journal of Economics and Financial Issues, 6 (spec. 7). pp. 181-185. ISSN 2146-4138 http://www.econjournals.com/index.php/ijefi/article/view/3604 |
| spellingShingle | Habibullah, Muzafar Shah Din, Badariah Saari, Mohd Yusof Abdul Hamid, Baharom Shadow economy and financial sector development in Malaysia |
| title | Shadow economy and financial sector development in Malaysia |
| title_full | Shadow economy and financial sector development in Malaysia |
| title_fullStr | Shadow economy and financial sector development in Malaysia |
| title_full_unstemmed | Shadow economy and financial sector development in Malaysia |
| title_short | Shadow economy and financial sector development in Malaysia |
| title_sort | shadow economy and financial sector development in malaysia |
| url | http://psasir.upm.edu.my/id/eprint/53808/ http://psasir.upm.edu.my/id/eprint/53808/ http://psasir.upm.edu.my/id/eprint/53808/1/Shadow%20economy%20and%20financial%20sector%20development%20in%20Malaysia.pdf |