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Savings and bank loans dynamics in implementing the new international accounting standard IFRS-9: Malaysia as a case study

Roslan, Syed and Masih, Mansur (2018): Savings and bank loans dynamics in implementing the new international accounting standard IFRS-9: Malaysia as a case study.

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Abstract

This paper makes an attempt to assess the impact of the implementation of the new Institutional International Financial Reporting Standard 9 (IFRS-9) which started in 2018 i.e. higher allocation for impairment loans to some of the major countries in the world by analysing the long-run relationship of four-variables which are savings, bank loans, economic growth and trade transactions using Malaysia as the case study.Although we discovered mixed evidence from different methods such as, Engle-Granger, Johansen, ARDL and NARDL cointegration tests due to smaller sample size, we proceeded with our test based on Johansen results to find whether there exists a long-run relationship between all four variables of our interest. We found that bank loans variable is the most leading variable that policymakers can use i.e. set the loans rate as an intermediate target to affect economic growth, savings and trade transactions. The results have strong policy implications for countries like Malaysia.

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