Financial Crisis In Malaysia: Determinant At Firm Level

Abstract

The Asian Financial Crisis (AFC) that hit Malaysia in the late 1990s appears to have a bad impact on economic growth at that time. Which, the real economy growth rate has fallen sharply from 7.3 percent in 1997 to -7.4 percent in 1998 as a result of the collapse of the currency in Thailand bath. Although Malaysia has experienced many economic crises since the early 1970s, but this financial crisis is the worst crisis ever recorded. Then, after 10 years later, Malaysia once again attacked by the Global Financial Crisis in 2008 as a result of the subprime mortgage system failure in the United States. However, the economy at that time is not adversely affected and over time, economic become recover. It showed that without proper precautionary plan and actions, the economy can collapse harshly. Then, it is important for Malaysia to develop a forecasting and determination model in the shape of an Early Warning System (EWS) to prevent similar consequences. Therefore, the aim of this study is to determine the need of Malaysia to point out the financial crisis determinant through appropriateness and the model in determining the impending financial crisis in the future. The data will be collected from Annual Report of the listed in Bursa Malaysia companies from the years of 1998 to 2000. The selected indicators are total revenue, profit loss before tax, total fixed asset, total long-term assets, total assets, total liabilities, total reserves and shareholders’ funds. Then, all this selected indicators will finally analyze by the model of Mahalanobis-Taguchi System (MTS) in determining the critical variables that could led to the future financial crisis.