Financial development and performance of palm oil industry in Malaysia

The finance-growth nexus is gaining credence among researchers. Growing research interest in developing evidences for different economic sectors has ignited this study to examine the topic in the agricultural sector for Malaysia. The analysis focuses on the palm oil industry using data for the period 1981 to 2017 using the Autoregressive Distributed Lagged (ARDL-bounds) approach. Financial development measures financial depth, accessibility, efficiency, and stability. Other variables include production factors such as land, labor, and capital. Findings/Originality: The findings show that the depth of the financial market has a positive impact on palm oil industry performance both in the short run and long run, though the depth of the financial institutions only takes effect in the long run. Meanwhile the financial accessibility, efficiency, and stability have no significant effect on the productivity of the industry. It implies that the equity market development is more relevant to affect the palm oil industry compared to credit market development.