Corporate financing behaviour of shariah compliant E50 SMEs. A panel data approach of GMM

Motivated by the recent outstanding growth of Islamic Finance in Malaysia, this study aims to investigate the debt financing behaviour of Shariah compliant E50 SMEs in Malaysia covering the existence of target debt, speed of adjustment and factors affecting the adjustment speed to target debt from 2...

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Main Author:	Haron, Razali
Format:	Article
Language:	English
Published:	UNISSULA 2016
Subjects:	HG4001 Financial management. Business finance. Corporation finance.
Online Access:	http://irep.iium.edu.my/51999/ http://irep.iium.edu.my/51999/ http://irep.iium.edu.my/51999/1/51999_Corporate%20financing%20behavior.pdf

id	iium-51999
recordtype	eprints
spelling	iium-519992016-10-31T01:27:14Z http://irep.iium.edu.my/51999/ Corporate financing behaviour of shariah compliant E50 SMEs. A panel data approach of GMM Haron, Razali HG4001 Financial management. Business finance. Corporation finance. Motivated by the recent outstanding growth of Islamic Finance in Malaysia, this study aims to investigate the debt financing behaviour of Shariah compliant E50 SMEs in Malaysia covering the existence of target debt, speed of adjustment and factors affecting the adjustment speed to target debt from 2009 to 2013. The Shariah Advisory Council (SAC), has set up certain standard of parameters as guidelines and carried out periodical monitoring in classifying Shariah compliant securities like the prohibition of activities that involve interest (riba), gambling (maisir), uncertainties and speculative trading (gharar). The dynamic model employed and estimated using the Generalized Method of Moment (GMM). Under the dynamic model, the observed debt of a firm should be equal to its optimal debt. However, with the presence of adjustment cost, a firm performs only a partial adjustment to be at the target debt. The model revealed certain determinants significantly influence target debt financing. The positive relationship between tangibility and capital structure yielded in this study enhances Shariah imposition that debt must be asset-backed which means a firm operating under Islamic principles cannot have debt exceeding the tangible assets. This study contributes to the literature and fills the gap by exploring into a relatively new area of debt financing which is the dynamic aspects and also help to enhance the understanding on debt financing behaviour of Shariah compliant SMEs in Malaysia. UNISSULA 2016-01-01 Article PeerReviewed application/pdf en http://irep.iium.edu.my/51999/1/51999_Corporate%20financing%20behavior.pdf Haron, Razali (2016) Corporate financing behaviour of shariah compliant E50 SMEs. A panel data approach of GMM. International Jurnal of Islamic Business Ethics (IJIBE), 1 (1). pp. 66-79. http://jurnal.unissula.ac.id/index.php/ijibe/login
repository_type	Digital Repository
institution_category	Local University
institution	International Islamic University Malaysia
building	IIUM Repository
collection	Online Access
language	English
topic	HG4001 Financial management. Business finance. Corporation finance.
spellingShingle	HG4001 Financial management. Business finance. Corporation finance. Haron, Razali Corporate financing behaviour of shariah compliant E50 SMEs. A panel data approach of GMM
description	Motivated by the recent outstanding growth of Islamic Finance in Malaysia, this study aims to investigate the debt financing behaviour of Shariah compliant E50 SMEs in Malaysia covering the existence of target debt, speed of adjustment and factors affecting the adjustment speed to target debt from 2009 to 2013. The Shariah Advisory Council (SAC), has set up certain standard of parameters as guidelines and carried out periodical monitoring in classifying Shariah compliant securities like the prohibition of activities that involve interest (riba), gambling (maisir), uncertainties and speculative trading (gharar). The dynamic model employed and estimated using the Generalized Method of Moment (GMM). Under the dynamic model, the observed debt of a firm should be equal to its optimal debt. However, with the presence of adjustment cost, a firm performs only a partial adjustment to be at the target debt. The model revealed certain determinants significantly influence target debt financing. The positive relationship between tangibility and capital structure yielded in this study enhances Shariah imposition that debt must be asset-backed which means a firm operating under Islamic principles cannot have debt exceeding the tangible assets. This study contributes to the literature and fills the gap by exploring into a relatively new area of debt financing which is the dynamic aspects and also help to enhance the understanding on debt financing behaviour of Shariah compliant SMEs in Malaysia.
format	Article
author	Haron, Razali
author_facet	Haron, Razali
author_sort	Haron, Razali
title	Corporate financing behaviour of shariah compliant E50 SMEs. A panel data approach of GMM
title_short	Corporate financing behaviour of shariah compliant E50 SMEs. A panel data approach of GMM
title_full	Corporate financing behaviour of shariah compliant E50 SMEs. A panel data approach of GMM
title_fullStr	Corporate financing behaviour of shariah compliant E50 SMEs. A panel data approach of GMM
title_full_unstemmed	Corporate financing behaviour of shariah compliant E50 SMEs. A panel data approach of GMM
title_sort	corporate financing behaviour of shariah compliant e50 smes. a panel data approach of gmm
publisher	UNISSULA
publishDate	2016
url	http://irep.iium.edu.my/51999/ http://irep.iium.edu.my/51999/ http://irep.iium.edu.my/51999/1/51999_Corporate%20financing%20behavior.pdf
first_indexed	2023-09-18T21:13:44Z
last_indexed	2023-09-18T21:13:44Z
_version_	1777411423469568000

Corporate financing behaviour of shariah compliant E50 SMEs. A panel data approach of GMM

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