The impact of financial crisis on the determinants of capital structure: evidence from financial sector listed in Bursa Malaysia / Wan Abdul Ra'uf Wan Roduan

Global financial crisis 2007 to 2008 had lead to down turns of stock market worldwide, bailout of banks by US government as well as collapse of big financial institutions. In the interim, the housing markets are also affected by the crisis which had led to many evictions. This crisis is also affected Malaysia's economy which had resulted in unsatisfied performance of most of the company in Malaysia. Firm specific weaknesses were essential factors in the failing performance of the corporate sector in Malaysia. Therefore, this study is to examine the impact of financial crisis on the determinants of capital structure of finance sector in Malaysia. In this study the two dependent variables used to measure the capital structure, are the short-term debt (STD - ratio of current liabilities to total assets) and long term debt (LTD - ratio noncurrent liabilities to total assets). Therefore, STD is related to the current liabilities, which usually include credit cards, bank overdrafts, lines of credit and liabilities to suppliers. On the other hand, LTD is related to non-current liabilities such as longterm bank loans and other long term liabilities as hire purchase or leasing. In addition, the determinants used to identify the impact of financial crisis on capital structure are firm size, liquidity, profitability and tangibility. Research period is from 2002 to 2013, resulting eleven (11) finance firms in financial sector listed in Bursa Malaysia. Panel data technique has been used and regression analysis has provided very significant results. The data for this study will be tested using the e-views software. The result is expected that all variables are significant to capital structure of finance firms.