Determinants of Corporate Borrowings in Malaysia

Tan, Yi Hong (2024) Determinants of Corporate Borrowings in Malaysia. Final Year Project (Bachelor), Tunku Abdul Rahman University of Management and Technology.

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Abstract

This paper is to investigate the determinants of corporate borrowings in Malaysia. The objective of this research is to analyse the relationship between tangibility, size, growth, and profitability with leverage by using the annual data from 1999 to 2021. Apart from that, 5 corporate companies such as Kossan Rubber Industries Berhad, Mah Sing Group Berhad, Tan Chong Motor Holdings Berhad, Carlsberg Brewery Malaysia Berhad and Dutch Lady Milk Industries Berhad had chosen in this study. In order to test whether the independent variables such as tangibility, size, growth, and profitability brought a significant impact towards leverage in Malaysia, panel ordinary least square (OLS) regression had employed. The result told us that tangibility caused positive but insignificant impact on leverage in Malaysia. Next, size is negative but significant to influence logarithm of leverage in Malaysia. Moreover, growth has a negative but got significant impact to determine leverage in Malaysia. In addition, profitability has a positive and significant impact to determine leverage in Malaysia. Based on the findings, the Malaysia government should implement a policy that provide petty loans with low interest rates to reduce higher debt burden as well as higher bankruptcy risk bear by the corporate companies. When the corporate firms gain a reduction of debt level and insolvency risk, lenders such as bank will have more willingness provide loans to the corporate company. In this case, this will cause a rising of corporate borrowings in Malaysia.