The impact of macroeconomic factors to household debt in Malaysia

Sarwe, Nurul Amalina (2019) The impact of macroeconomic factors to household debt in Malaysia. Project Report. Universiti Teknikal Malaysia Melaka, Melaka, Malaysia. (Submitted)

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Abstract

The increase in household debts in Malaysia which has escalated to about 89% of total GDP is deemed to be worrying stage as it may in turn trigger another financial crisis. The aim of the study is to identify the impact of the macroeconomic factor on household debt in Malaysia. In these macroeconomic indicators or the independent variables consist of as gross domestic product (GDP), interest rate (IR), house price index (HPI), Unemployment Rate (UNEM), and consumer price index (CPI). Firstly, the researcher will determine which indicator will be detected as the most significant impact on household debt. Secondly, the study will investigate the relationship between each factor to study the impact of household debt. Thirdly, the scope is to identify comparison data covered a 10 years period, beginning from 2008 to 2017. This study is conducted in Malaysia where all of statistics, past data, facts and annual report from Central Bank of Malaysia, Department of Statistic of Malaysia, and The World Bank of Data. The research method used to conduct the study is by a quantitative approach where definitely use secondary data. This study employed all independent variables will be analyzed using Pearson Correlation and Simple Linear Regressions (SLR). Additionally, the results show that the consumer price index is the most significant factor that gives the impact toward household debt, followed by interest rate, gross domestic product, house price index and the unemployment rate. Thus, the future researcher can use a qualitative method to measure the different angle of this study. For instance, social factor such as lifestyle, family earn, wealth, education and occupation. Then, technology factor such as mobile technology. From that, the researcher can find and analyzed the impact of various factor and not focusing on macroeconomic indicators only.

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