Analysis reveals that economic growth and real interest rates positively impact financial development, suggesting a need for stable macroeconomic conditions.
Key Points
Economic growth has a positive impact on financial development in Malaysia, indicating intertwined growth dynamics.
Inflation negatively affects financial development, highlighting the need for low inflation policies.
Control variables like trade openness and human capital are crucial for accurate results and unbiased insights.
Using ARDL estimation on 42 years of data, the study provides a comprehensive view of financial dynamics.