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Summary
In the last three decades, finance has grown beyond its traditional role as a provider of capital for the productive economy to an industry of its own, playing an increasingly central role in the daily activities of economies, institutions, and households. The growth of the financial services sector has rapidly financialized households, offering greater access to financial products and services, thus facilitating activities such as homeownership, wealth accumulation, and financial planning. However, financialization has also led to adverse effects, including increased household debt, financial vulnerability and exposure to new risks and uncertainties due to easy access to consumer credit.
This report provides an analysis of societal well-being items (housing and university education) to mitigate incidences of high household debt for lower- and middle-range households. It also discusses the market push for consumerism through the use of “Buy Now, Pay Later” (BNPL) schemes amidst the backdrop of households’ wage stagnation. These different household debt items were contextualised within the institutional arrangement (i.e., intermediaries of finance and private firms) and the role of the state in order to provide improvements to both outcomes and the institutional context.
Chapter 1 presents evidence of wage stagnation and the decreased welfare of households. Household spending patterns have become increasingly diverse. This chapter analyses households' borrowing structure to elucidate whether they leverage debt to fuel their consumption-driven lifestyles.
Chapter 2 examines the rise of BNPL in Malaysia and the economic implications associated with its usage. It also dives into cultural ramifications in terms of the normative emphasis on instant gratification and consumerism. Subsequently, the chapter offers policy options for relevant stakeholders to navigate the evolving BNPL landscape.
Chapter 3 addresses the growing phenomenon of higher education debt in Malaysia and how it may contribute to a broader issue of household indebtedness. The chapter sets forth two important agendas—1) a policy review of feasible pathways to mitigate student debt and 2) potential adjustments to the institutional landscape, to facilitate a sustainable and supportive financial framework for higher education financing in Malaysia.
Chapter 4 analyses the housing delivery system within the backdrop of housing loans. It provides a justification to reconfigure the institutional arrangement and the social construction of the housing delivery system to ensure that it provides the outcomes that the economy requires as opposed to the sole objective of achieving housing market ‘efficiency’.
Each chapter details policy options that leverage the role of the state to intervene with strict regulations and laws, while some detail the changes that need to be made to the entire ecosystem or institutional arrangement that appear to support growing financialization at the back of disadvantaging the least economically able households.
