Unsecured Loan Household Debt in

Masturah Ma’in, Nur Fadhilah Hussin, Ruhaini Muda
Faculty of Business and Management, Universiti Teknologi MARA

Siti Sarah Mat Isa
Faculty of Business and Management, Melaka International College of Science and Technology


Recently, there are raising concerns on unsecured loan in Malaysia household debt due to its mounting growth for the last ten years. This study investigated the determinants of unsecured household debt loans in Malaysia, whereby the autoregressive distributed lag model (ARDL) approach was implemented to examine six variables. They included: Gross Domestic Product (GDP), Housing Price Index (HPI), Consumer Price Index (CPI), interest rate, and unemployment rate. Here, quarterly data throughout 11 years spanning from 2007Q1 to 2017Q4 were sourced for analysis purposes. The findings revealed that in the long run, a change in income level and interest rate posed significant impacts on unsecured household debts. In particular, income changes positively influenced the unsecured household debts, while interest rate shifts would negatively influence them. Thus, policymakers are recommended to raise the household subsidization for specific groups in the population in the bid to cater to high unsecured loans, which would reflect the income inequality among citizens of this nation.

Keywords: ARDL, Household debt, Malaysia, Unsecured loan