Firm's investment and monetary policy

Panel analysis of shariah compliant firms in Malaysia

Research output: Contribution to journalArticle

Abstract

This paper examines the effects of monetary policy on firm balance sheet channel by focusing on syariah compliant firm's investment spending listed in Bursa Malaysia from year 2003 until 2011. The dynamic panel data method namely Generalized Method of Moments (GMM) is used in investigating two monetary policy channels namely interest rates and broad credit channel using a dynamic neoclassical investment model. The sample of the firms has been split into small and large firm to identify the heteregoneity of monetary policy effects on invetsment spending across firm size. The empirical results reveal that both monetary policy channels, namely interest rates and broad credit channel are relevant for the case of Malaysia. This findings indicate that investment spending of syariah compliant firms do respond to monetary policy changes. Moreover, the investments of small firms are more dependent on internal cash flow than that of large firms. Therefore, the policy maker should take into account the differences in firms characteristics in implementing monetary policy to ensure that their policy is effective.

Original languageEnglish
Pages (from-to)71-82
Number of pages12
JournalJurnal Ekonomi Malaysia
Volume49
Issue number1
DOIs
Publication statusPublished - 2015

Fingerprint

Panel analysis
Firm investment
Monetary policy
Malaysia
Investment policy
Large firms
Interest rates
Credit channel
Small firms
Generalized method of moments
Firm size
Policy change
Politicians
Cash flow
Dynamic panel data
Panel data methods
Firm characteristics
Empirical results
Balance sheet

Keywords

  • Dynamic panel data
  • Monetary policy firm investment
  • Shariah compliant firms

ASJC Scopus subject areas

  • Business, Management and Accounting (miscellaneous)

Cite this

Firm's investment and monetary policy : Panel analysis of shariah compliant firms in Malaysia. / Napiah, Intan Nurul Nadia Mohd; Abdul Karim, Zulkefly; Zaidi, Mohd Azlan Shah; Ismail, Mohd Adib.

In: Jurnal Ekonomi Malaysia, Vol. 49, No. 1, 2015, p. 71-82.

Research output: Contribution to journalArticle

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