Imports and institutional risks nexus

This paper examines the impact of institutional risks on imports in Malaysia. Unlike the existing studies, this paper defines risks from the perspective of politics, economic and finance. This paper differs from other existing paper because it accommodates the effect of political risks which is relatively under-explored. Three types of political risks namely bureaucracy quality, religion in politics and internal conflict seems to give rise to significant negative impact towards imports into Malaysia. The impact however, is relatively small. As for financial risk, only external debt has a negative and significant effect on imports. Finally, from the economic risk point of view, only GDP per capita has a positive and significant impact on imports. An important policy implication is that policy makers should account for political risks apart from the conventional economic and financial risks. Greater institutional risks emanating from bureaucracy or religious matters and internal conflict would negatively affect imports in the long run.