Revisit Bonds Market and Aggregate Output Nexus: The Malaysian Case

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Aiman Safwan Ahmad Suhaimi
Hway-Boon Ong


The capability of the bonds market to channel savings to investors plays a significant role in promoting aggregate output.  However, some recent studies argue that the connection between bond market development and economic activities is uncertain. The purpose of this study is to examine how the bonds market in Malaysia may affect its aggregate output based on the period between 1990 to 2020.  The autoregressive distributed lag (ARDL) bounds test is applied to study the nexus of the bonds market and the aggregate output of Malaysia. The results suggest a positive effect of private and public bonds on the economy of Malaysia.  The findings imply a long-term effect running from the bonds market to aggregate output, supporting the notion that the bonds market has a direct and positive effect on channelling a surplus of funds to finance economic activities in Malaysia.

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Financial Economics