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Determinant of securitization spread in Malaysia

Malaysian firms have been reported to be involved in Asset-Backed Securities since 1986 when Cagamas Bhd was the pioneer in the field. This research aims to examine the factors influencing spread in Malaysia’s securitization market. In order to provide a test of stability and a choice of model, the...

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Main Authors:	Bakri, Mohammed Hariri, Sufian, Fadzlan, Abdul Hamid, Baharom, Ismail, Shafinar
Format:	Article
Language:	English
Published:	Universiti Malaysia Sarawak 2018
Subjects:	H Social Sciences (General) HF Commerce
Online Access:	http://eprints.utem.edu.my/id/eprint/22655/2/IJBS.pdf http://eprints.utem.edu.my/id/eprint/22655/ https://www.researchgate.net/publication/329450345_DETERMINANT_OF_SECURITIZATION_SPREAD_IN_MALAYSIA
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spelling	my.utem.eprints.226552023-08-08T10:29:27Z http://eprints.utem.edu.my/id/eprint/22655/ Determinant of securitization spread in Malaysia Bakri, Mohammed Hariri Sufian, Fadzlan Abdul Hamid, Baharom Ismail, Shafinar H Social Sciences (General) HF Commerce Malaysian firms have been reported to be involved in Asset-Backed Securities since 1986 when Cagamas Bhd was the pioneer in the field. This research aims to examine the factors influencing spread in Malaysia’s securitization market. In order to provide a test of stability and a choice of model, the multicollinearity test was conducted by providing information on the degree of correlation between the explanotary variables used in the multivariate regression analysis. Ordinary Least Square method was used for baseline, and panel data analysis was applied during the study period (2004-2012) for a more robust check of the analysis. The data were obtained from 90 non-financial firms or institutions and the number of observations carried out was 387. The results show that four determinants influence or contribute to the primary market spread and are statistically significant in developing securitisation in Malaysia. It can be concluded that loan to value, maturity, debt and crisis significantly contribute to the determinant primary market spread. From five hypotheses, two hypotheses support that the determinants have a relationship with primary market spread. The result will act as a model and benchmark for other ASEAN countries to use as Malaysia was resilient during the subprime mortgage crisis in 2008. Policy makers can use this study to execute the timing and quantum of issuance securitisation. The other findings of this study have considerable policy relevance. It could be stated that the higher the risk reflects the higher the spread of the firm, especially when there is lower credit rating during crisis periods and higher debt. Therefore, the role of a firm is to reduce the risk in order to reduce the spread, and simultaneously reduce the cost of financing by finding alternative sources of funding. The continued success of the Malaysian securitisation firms depends on their efficiency in using their resources and the competitiveness of the firms. Universiti Malaysia Sarawak 2018 Article PeerReviewed text en http://eprints.utem.edu.my/id/eprint/22655/2/IJBS.pdf Bakri, Mohammed Hariri and Sufian, Fadzlan and Abdul Hamid, Baharom and Ismail, Shafinar (2018) Determinant of securitization spread in Malaysia. International Journal Of Business And Society, 19 (3). pp. 904-917. ISSN 1511-6670 https://www.researchgate.net/publication/329450345_DETERMINANT_OF_SECURITIZATION_SPREAD_IN_MALAYSIA
institution	Universiti Teknikal Malaysia Melaka
building	UTEM Library
collection	Institutional Repository
continent	Asia
country	Malaysia
content_provider	Universiti Teknikal Malaysia Melaka
content_source	UTEM Institutional Repository
url_provider	http://eprints.utem.edu.my/
language	English
topic	H Social Sciences (General) HF Commerce
spellingShingle	H Social Sciences (General) HF Commerce Bakri, Mohammed Hariri Sufian, Fadzlan Abdul Hamid, Baharom Ismail, Shafinar Determinant of securitization spread in Malaysia
description	Malaysian firms have been reported to be involved in Asset-Backed Securities since 1986 when Cagamas Bhd was the pioneer in the field. This research aims to examine the factors influencing spread in Malaysia’s securitization market. In order to provide a test of stability and a choice of model, the multicollinearity test was conducted by providing information on the degree of correlation between the explanotary variables used in the multivariate regression analysis. Ordinary Least Square method was used for baseline, and panel data analysis was applied during the study period (2004-2012) for a more robust check of the analysis. The data were obtained from 90 non-financial firms or institutions and the number of observations carried out was 387. The results show that four determinants influence or contribute to the primary market spread and are statistically significant in developing securitisation in Malaysia. It can be concluded that loan to value, maturity, debt and crisis significantly contribute to the determinant primary market spread. From five hypotheses, two hypotheses support that the determinants have a relationship with primary market spread. The result will act as a model and benchmark for other ASEAN countries to use as Malaysia was resilient during the subprime mortgage crisis in 2008. Policy makers can use this study to execute the timing and quantum of issuance securitisation. The other findings of this study have considerable policy relevance. It could be stated that the higher the risk reflects the higher the spread of the firm, especially when there is lower credit rating during crisis periods and higher debt. Therefore, the role of a firm is to reduce the risk in order to reduce the spread, and simultaneously reduce the cost of financing by finding alternative sources of funding. The continued success of the Malaysian securitisation firms depends on their efficiency in using their resources and the competitiveness of the firms.
format	Article
author	Bakri, Mohammed Hariri Sufian, Fadzlan Abdul Hamid, Baharom Ismail, Shafinar
author_facet	Bakri, Mohammed Hariri Sufian, Fadzlan Abdul Hamid, Baharom Ismail, Shafinar
author_sort	Bakri, Mohammed Hariri
title	Determinant of securitization spread in Malaysia
title_short	Determinant of securitization spread in Malaysia
title_full	Determinant of securitization spread in Malaysia
title_fullStr	Determinant of securitization spread in Malaysia
title_full_unstemmed	Determinant of securitization spread in Malaysia
title_sort	determinant of securitization spread in malaysia
publisher	Universiti Malaysia Sarawak
publishDate	2018
url	http://eprints.utem.edu.my/id/eprint/22655/2/IJBS.pdf http://eprints.utem.edu.my/id/eprint/22655/ https://www.researchgate.net/publication/329450345_DETERMINANT_OF_SECURITIZATION_SPREAD_IN_MALAYSIA
_version_	1775626882690056192
score	13.211869

Determinant of securitization spread in Malaysia

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