Debt Determinants of Shari’ah Approved Firms : Empirical Evidence from Malaysia

Nurshamimitul Ezza Ramli; Razali Haron

doi:10.12816/0047349

Article Details

Debt Determinants of Shari’ah Approved Firms : Empirical Evidence from Malaysia

Authors:

Nurshamimitul Ezza Ramli | Razali Haron

Publisher:

IIUM Institute of Islamic Banking and Finance

Main Topics:

Islam, Bábism & Bahá"í Faith

Journal:

Journal of Islamic Finance 2017 Vol.6 Issue (Special Issue), pp.188-204

Document Type:

Article

Publication Date:

1/2017

Document Language:

English

Document ID (Org No.):

118485

Frequency:

Annual

eISSN:

22892117

pISSN:

22892109

DOI:

10.12816/0047349

Descriptors:

Keywords:

Abstract:

 The issue of high reliance on debt has raised major concern especially since its impact has been linked to the severalcorporate problems in United States’ big corporations such as Enron and Lehman Brothers. On a wider scope, theimpact of debt may also be evidenced by the Greek Depression in the year 2009. Various studies have been conductedto explain which factors determine debt of the firms, given different setting of periods, countries and methodologies.Uniquely, this study focuses on the firms which stocks are Shari’ah approved in accordance to the Malaysia’sSecurities Commission guidelines. This study covers a balanced panel of 239 Shariah approved firms listed on the Bursa Malaysia for the period of analysis from 2000 to 2014. To meet its objective, this study employs a static panelregression model which includes the pooled OLS, random effect model (REM) and fixed effect model (FEM). Thestudy also conducts a robustness test to the empirical model. Several factors have been examined and the result showsthat certain firm-specific variables like growth opportunity, size, bankruptcy risk, non-debt tax shield (NDTS) andHerfindahl-Hirschman Index are significant determinants of a firm’s debt. Also macro variables such as inflation,GDP and economic crisis are also found to be significant determinants of Shariah approved firms’ debt. In contrastwith the prior studies that focuses on the non-Shariah approved firms, the output from this study provides new insightand understanding on the debt determinants of Shariah approved firms.

Article Details

Debt Determinants of Shari’ah Approved Firms : Empirical Evidence from Malaysia

Authors:

Nurshamimitul Ezza Ramli | Razali Haron

Publisher:

IIUM Institute of Islamic Banking and Finance

Main Topics:

Islam, Bábism & Bahá"í Faith

Journal:

Journal of Islamic Finance 2017 Vol.6 Issue (Special Issue), pp.188-204

Document Type:

Article

Publication Date:

1/2017

Document Language:

English

Document ID (Org No.):

118485

Frequency:

Annual

eISSN:

22892117

pISSN:

22892109

DOI:

10.12816/0047349

Descriptors:

DEBT

BANKRUPTCY

INFLATION

GROSS DOMESTIC PRODUCT

ECONOMIC RECESSION

ISLAMIC LAW

CORPORATIONS

MALAYSIA

Debt Determinants

Shariah Approved Firms

Islamic Finance

Panel Data

Issues

Article Details

Authors: Nurshamimitul Ezza Ramli | Razali Haron

Publisher: IIUM Institute of Islamic Banking and Finance

Main Topics: Islam, Bábism & Bahá"í Faith

Journal: Journal of Islamic Finance 2017 Vol.6 Issue (Special Issue), pp.188-204

Document Type: Article

Publication Date: 1/2017

Document Language: English

Document ID (Org No.): 118485

Frequency: Annual

eISSN: 22892117

pISSN: 22892109

DOI: 10.12816/0047349

Descriptors:

Issues

Authors:

Nurshamimitul Ezza Ramli | Razali Haron

Publisher:

IIUM Institute of Islamic Banking and Finance

Main Topics:

Islam, Bábism & Bahá"í Faith

Journal:

Journal of Islamic Finance 2017 Vol.6 Issue (Special Issue), pp.188-204

Document Type:

Article

Publication Date:

1/2017

Document Language:

English

Document ID (Org No.):

118485

Frequency:

Annual

eISSN:

22892117

pISSN:

22892109

DOI:

10.12816/0047349