Factors Affecting Accumulation of Household Debts in Malaysia

Since 2000, the ratio of debt to income among Malaysian households has been showing an upward trend. This paper examines factors affecting accumulation household loansinto two main categories, housing loans and consumption loans. The purpose this separation is study impact savings on individually, which not researched in a context prior this. By adopting Vector Error Correction Model (VECM), we found that cost living, house prices impacts differently. There positive relationship between Cost living other hand negative with House negatively related fills literature gap household’s both Among policy implications proposed by rectify influencethe root causes inflation.