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Table 1
Ratio of Financial Institutions Assets (FIA), Financial Institutions Loans (LOAN) and Difference of
Money and the Monetary Base (MMB) to Output (GDP)

Ratio
1960 1970 1980 1990 2000
FIA/GDP 0.3336 0.7148 1.1581 2.1868 2.9565
LOAN/GDP 0.0043 0.2429 0.5289 1.0018 1.3189
MMB/GDP 0.1382 0.1443 0.3160 0.4550 0.8413
Source: Bank Negara Malaysia (BNM) Annual Report

Table 2
Augmented Dickey-Fuller (ADF) and Phillip-Perron (PP) Statistics For GDP and
Measures of the Financial Intermediation and Money

Malaysia 1959-2000
Level ADF PP
D(LGDP) -2.6260 -2.3147
D(LCBA) -1.5147 -1.6661
D(LBANKA) -1.6325 -1.6465
D(LFIA) -1.1225 -1.0946
D(LMMB) -2.1271 -1.9937
D(LLOAN) -3.2117 -2.6736

1st Difference ADF PP

D(LGDP) -4.3228* -5.0907*
D(LCBA) -3.3369* -5.6429*
D(LBANKA) -3.4474* -5.5478*
D(LFIA) -3.3328* -4.8897*
D(LMMB) -3.3778* -5.8481*
D(LLOAN) -4.4941* -5.8967*
Notes: The ADF statistics were generated by a model with constant, trend and 1 lags.
*denote rejections of the null at the 5 %
All variables were tested in the difference and lag form.
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Table 3
Johansen Test Statistics For Cointegration Between Log GDP and Measure of Money and Financial
Intermediation

Malaysia Trace Statistics (Likelihood Ratio) Eigen Value Normalized

1959-2000 r=0 r1 r=0 r  1 Cointegration Vector
LCBA 26.3953* 6.5258 0.3915* 0.1505 1, -1.4514
LBANKA 26.2644* 6.8008 0.3853* 0.1564 1, -1.4419
LFIA 24.5643* 6.7191 0.3599* 0.1546 1, -1.3662
LMMB 29.8209* 6.2471 0.4453* 0.1446 1, -1.4958
LLOAN 32.1244* 14.1662* 0.3690* 0.3046* 1, -1.4339
Note: The lag length for this analysis is 1 lags. The columns labelled r=0 test a null of
cointegration, while the r  1 columns test a null of at most one cointegrating vector. All
variables were tested in lag form. The normalized cointegration vector refers to cointegration
vector of GDP and financial intensity.
* denote rejections of the null at the 5%

Table 4
Vector Error Correction Model Test For Difference and Log GDP, Financial Intermediation and Money

Cointegrating Vector Error Correction Term (ECT) R2

D(LCBA) 1, -1.4514 -0.0635 -0.0341

(-2.3047)*

D(LBANKA) 1, -1.4419 -0.0655 -0.0361

(-2.1809)*

D(LFIA) 1, -1.3662 -0.0236 -0.0063

(-1.7223)**

D(LMMB) 1, -1.4958 -0.1211 -0.0515

(-2.0832)*

D(LLOAN) 1, -1.4339 -0.0162 -0.1558

(-2.7834)*
Note: In the ECT column, the t-statistics is in parentheses, with significant level.
* denote rejections of the null at the 5%.
** denote rejection of the null at the 10%
All variables were tested in lag and difference form.

Table 5
VECMs Causality Test For Difference and Lag GDP, Financial Intermediation and Money
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Cointegration Vector Null Hypothesis ECT Decision
D(LGDP) does not Granger cause D(LCBA) -0.1454 Reject
(-4.8646)*
1, -1.4514
D(LCBA) does not Granger cause D(LGDP) -0.0635 Reject
(-2.3047)*
            
D(LGDP) does not Granger cause -0.1475 Reject
D(LBANKA)
(-4.8042)*
1, -1.4419
D(LBANKA) does not Granger cause -0.0655 Reject
D(LGDP)
(-2.1809)*
            
D(LGDP) does not Granger cause D(LFIA) -0.0573 Reject
(-4.5270)*
1, -1.3662
D(LFIA) does not Granger cause D(LGDP) -0.0236 Reject
(-1.7223)**
            
D(LGDP) does not Granger cause D(LMMB) -0.4235 Reject
(-5.3759)*
1, -1.4958
D(LMMB) does not Granger cause D(LGDP) -0.1211 Reject
(-2.0832)*
            
D(LGDP) does not Granger cause -0.1158 Reject
D(LLOAN)
(-3.4171)*
1, -1.4339
D(LLOAN) does not Granger cause -0.0162 Reject
D(LGDP)
(-2.7834)*
            
Note: The lag length for this analysis is 3 lags.
* denote rejection of the null at 5% level.
** denote rejection of the null at 10% level.
All variables were tested in lag and difference form.