Determinants of capital structure: evidence from Malaysian firms

• Main Authors: Saif-Alyousfi, Abdulazeez Y.H., Md Rus, Rohani, Taufil Mohd, Kamarun Nisham, Mohd Taib, Hasniza, Shahar, Hanita Kadir
• Format: Article
• Language: English
• Published: Emerald Publishing LimiteD 2020
• Subjects: HC Economic History and Conditions
• Online Access: http://repo.uum.edu.my/27451/1/APJBA%202020%201%2044.pdf; http://repo.uum.edu.my/27451/; http://doi.org/10.1108/APJBA-09-2019-0202
• Institution: Universiti Utara Malaysia

The paper examines the impact of oil and gas price shocks on bank performance in the major oil and gas exporting GCC countries, using data for the period 2000-2017. Results indicate that oil and gas price rises have a direct bearing on bank performance through the channel of priceinduced bank deposits and related lending to business activities. The negative impact on bank performance due to a drop in oil and gas prices is greater than the positive effect of a rise in prices. Findings suggest that oil and gas price volatility has an asymmetric effect on conventional and Islamic banks. Conventional banks reap more benefit from the increased cash flow created by oil and gas prices, compared to Islamic banks. While Islamic banks are generally vulnerable to adverse oil and gas price shocks, conventional banks tend to benefit more from positive oil and gas price shocks. The association between oil and gas price shocks and bank performance in GCC has been distorted by the global financial crisis, the Arab Spring, and the ongoing Yemen War, which have lowered performance. The findings of the study have significant policy implications for the central banks as well as the governments in the oil and gas-exporting countries.