DETERMINANTS OF PERSONAL BANKRUPTCY DISCHARGE IN MALAYSIA: A SOCIAL CAPITAL APPROACH OF AL-NAHD AND TA’AWUN
This study investigates the relationship between Gross Domestic Product (GDP), Consumer Price Index (CPI), Unemployment Rate (UE), Interest rate (IR), Household Debt (HD) on bankruptcy discharge and test the application of an Islamic concept of mutual cooperation, Social Relief Fund (SRF) to enhance the bankruptcy discharge. The study period is from 2000 to 2019. The autoregressive distributed lag (ARDL) was used in the study. Two models were tested; Model 1 consists of the macroeconomic variables without SRF and Model 2, with SRF. Model 1 shows none of the variables has significant effect on bankruptcy discharge for long run relationship. However, Model 2 shows GDP, CPI and SRF have significant positive long run relationship with bankruptcy discharge. This provides statistical evidence that SRF has a beneficial long-run relationship to enhance bankruptcy discharge in Malaysia. For short run relationship, Model 1 reveals GDP, CPI, and UE as significant variables to discharge. Model 2 shows stronger short run relationships in which GDP, IR, HD, SRF are positive and CPI is negative to bankruptcy discharge. These variables are significant at 1 percent level. The findings contribute new knowledge on determinants of bankruptcy discharge in Malaysia. The study provides empirical evidence that SRF is a potential component as a social safety net in providing financial assistance among distressed debtors from bankruptcy. We recommend the use of SRF as the current bankruptcy reform is being viewed from the legislative lens and lacks the social capital component to assist debtors achieve financial restitution.
Altman, 1983Altman, E. I. 1983. Corporate financial Distress: a complete guide to predicting, avoiding, and dealing with bankruptcy. 1st ed. New York: Wiley. The Journal of Finance Vol. 38, No. 2, Papers and Proceedings Forty-First Annual Meeting American Finance Association New York, N.Y. December 28-30, 1982 (May, 1983), pp. 517-522 (6 pages
Bahagian Halehwal Undang Undang, (2019). Prime Minister Department of Malaysia.
Baltaji, 2008 Baltaji, Muhammad. `Uqud al-Ta’min Min Wijha al-Fiqh al-Islamiyy Cairo: Dar al-Salam, 2008. Print.
Benito et al., 2004; Benito et al., 2004; Benito A., Delgade F., Pag´es J. 2004: A Synthetic Indicator of Financial Pressure for Spanish Firms, Banco de Espa˜na, Madrid.
Brandolini, A. and Cannari L. 1994, ”Methodological Appendix: The Bank of Italy Survey of Household Income and Wealth”, Ando A., Guiso L. and Visco I. Saving and the accumulation of wealth. Essays on Italian households and government saving behavior, Cambridge: Cambridge University Press.
Bukhari, 1981 Bukhari, Muhammad ibn Isma`il ibn Ibrahim, Sahih al-Bukhari, ed. by Muhammad Dhihni, 8 vols. Egypt: Dar al-Fikr, 1981. Print
Buehler et al., 2012; Buehler et al., 2012 Buehler, Michael. 2012a. Countries at the Crossroads: Indonesia, Washington D.C.: Freedom House. 2012b. Moves on Indonesian Anti-Graft Body Will Slow Reform. Oxford: Oxford Analytica.
Carling et al., 2007; Carling, K., Jacobson, T., Linde, J., and Rozbach, K. (2007) Corporate credit risk modelling and the macroeconomy. Journal of Banking and Finance, 41:845–868. (Cited on p. 100)
Case, A. and L. Katz 1991, “The Company You Keep: The Effect of Family and Neighborhood on Disadvantaged Youth,” NBER working paper # 3805.
Coleman J.S., 1990, Foundations of Social Theory, Harvard University Press, Cambridge, MA.
Contreras, 2016; Contreras, 2016; Determinants of bank profitability in emerging markets, Bank for International Settlements 2018 (BIS) Working Papers No 686
Elamin & Tlaiss, 2015; Elamin, A., & Tlaiss, H. (2015). Exploring the relationship between organizational citizenship behavior and organizational justice in the Islamic Saudi Arabian context. Employee Relations, 37(1), 2-29. http://dx.doi.org/10.1108/ER-03-2014-0033
Everett & Watson, 1998, Everett & Watson, 1998, Small Business Failure and External Risk Factors. Small Business Economics 11: 371–390, 1998. Kluwer Academic Publishers.
Fukuyama, F. , 1995, Trust: The Social Virtues and the Creation of Prosperity, Free Press.
Fukuyama, F. , 1997, ”Social capital and the modern capitalist economy: Creating a high trust workplace”, Stern Business Magazine, 4(1).
Granovetter (1995) Granovetter M. 1985, ”Economic Action and Social Structure: the problem of embeddedness”, American Journal of Sociology, 23, pp. 481-510
Greve, A., Benassi, M., & Sti, A. D. (2010). Exploring the contributions of human and social capital to productivity. International Review of Sociology, 20(1), 35-58
Howard M, 1987,Theory of Discharge in Consumer Bankruptcy, A M Howard - Ohio St. LJ, 1987 - HeinOnline
Helliwen & Putnam, (1995) Putnam, R. D. (1995). Bowling alone: America's declining social capital http://go.galegroup.com/ps/i.do?id=GALE%7CA17328078&v=2.1&u=pe r_eit&it=r&p=ITOF&sw=w&asid=7ba89e659203eaf765d068fb923f57cf
Granger, C.W. (1988), “Some recent development in a concept of causality”, Journal of Econometrics, Vol. 39 Nos 1-2, pp. 199-211, Doi: 10.1016/0304-4076(88)90045-0.
Greve, Benassi and Sti (2010) Exploring the contributions of human and social capital to productivity
Pages 35-58 | Received 01 Aug 2008, Published online: 22 Mar 2010
Harangozó & Zilahy, 2015 Cooperation between business and non-governmental organizations to promote sustainable development. Journal of Cleaner Production Volume 89, 15 February 2015, Pages 18-31
Harris and Sollis, 2003). Harris, R. and Sollis, R. (2003), “Applied time series modelling and forecasting”, International Journal of Forecasting, Vol. 20, pp. 137-150.
Ibn Hajar, 1939; Ibn Hajar al-`Asqalani. Fath al-Bari bi Sharh Sahih Bukhari, 28 vols. Egypt: Matba`a al-Bahiyya, 1939. Print.
Ibn Manzur, n.d.)Ibn Manzur, Abu al-Fadl Jamal al-Din Muhammad b. Mukarram al-Ansari. Lisan al-`Arab, 15 vols Egypt: Matba`a al Misriyya, 1300H. Print.
Iyer S., Kitson M. and Toh B. (2005), Social Capital, Economic Growth and Regional Development, Regional Studies, Vol. 39.8, pp. 1015–1040, November 2005
Jureviciene, Taujanskaite, & Sukacevskyte (2016) Jureviciene, Taujanskaite, & Sukacevskyte (2016) Indirect Factors Affecting Personal Solvency: Empirical Analysis of Lithuanian Consumer Credit Market, European Scientific Journal 12, no. 1, (2016): 157–74.
Katherine Porter and Deborah Thorne 2006, The Failure of Bankruptcy’s Fresh Start, 92 Cornell L. Rev. 67 (2006) Available at: http://scholarship.law.cornell.edu/clr/vol92/iss1/2
Knack, S. and Keefer, P. , 1996. ”Does social capital have an economic payoff?: a cross-country investigation”, The Quarterly Journal of Economics, 112(4): 1251.
Knack, S., and P. Zak, 1999 “Trust and Growth ”, Claremont University Working Paper.
Local Loan Co. v. Hunt, 1934, Strasburger, Albert F. Jr., "Wage Assignment Problem, The" (1935). Minnesota Law Review. 806. https://scholarship.law.umn.edu/mlr/806
Liu, 2004, Credit scoring system for small business loans. Decision Support System Volume 38, Issue 1, October 2004, Pages 91-99 https://doi.org/10.1016/S0167-9236(03)00079-4
Liu, 2009 The effect of GDP growth on pharmaceutical patent protection, 1945-2005 S La Croix, M Liu - Brussels Economic Review, VoL. 52 N° (3/4) 2009 - dipot.ulb.ac.be
Luigi Guiso, Paola Sapienza, Luigi Zingales, (2000) Guiso, Luigi, Paola Sapienza, and Luigi Zingales. "The Role of Social Capital in Financial Development." American Economic Review, 94 (3): 526-556.DOI: 10.1257/0002828041464498 The Role of Social Capital in Financial Development Luigi Guiso, Paola Sapienza, and Luigi Zingales NBER Working Paper No. 7563 (2000)
Lütkepohl, 2007). General-to-specific or specific-to-general modelling? An opinion on current econometric terminology Journal of Econometrics Volume 136, Issue 1, January 2007, Pages 319-324
Mahmud, 2000 Mahmud, A. H. (2000). Merajut Benang Ukhuwah Islamiah. Print
Mainal, Kassim, Ho, Yusof, 2016; "Preliminary Investigation on the Determinants of Household Debt Burden." Proceedings of the 1st AAGBS International Conference on Business Management 2014 (AiCoBM 2014) pp 479-488. Springer Singapore, 2016
Ma’in, Tajuddin & Nathan, 2016; Household debt and macroeconomic variables in Malaysia on Business futureacademy.org.uk http://dx.doi.org/10.15405/epsbs.2016.11.02.12
Ozturk and Karagoz, 2012) Ozturk, N. and Karagoz, K. (2012), “Relationship between inflation and financial development: evidence from Turkey”, International Journal of Alanya Faculty of Business, Vol. 4 No. 2, pp. 81-87.
Pattichis CA (1999). Price and Income Elasticities of Disaggregated import Demand: Results from UECMs and an Application. Applied Economics. 31 (9): 1061-71.
Pesaran et al., 2001 Pesaran, M.H., Shin, Y. and Smith, R.J. (2001), “Bounds testing approaches to the analysis of level relationships”, Journal of Applied Econometrics, Vol. 16 No. 3, pp. 289-326
Porter and Thorne (2006), ‘The Failure of Bankruptcy’s Fresh Start’ (2006) 92(1) Cornell Law Review 67, 68
Ptak-Chmielewska & Matuszyk, 2019; Ptak-Chmielewska & Matuszyk, 2019; Macroeconomic factors in modelling the SMEs bankruptcy risk. The case of the Polish market. Journal: Ekonometria, 2019 - ceeol.com Issue No: 3, Page: 40-49
Putnam, R. (1993), Making Democracy Work Civic Traditions in Modern Italy, Princeton, Princeton University Press.
Putnam, R. (1995), Economic Growth and Social Capital in Italy, John F. Helliwell and Robert D. Putnam
Eastern Economic Journal Vol. 21, No. 3 (Summer, 1995), pp. 295-307 (13 pages)
Quran, 51:56 English Translation of the Holy Quran by Maulana Muhammad Ali @ aaiil.orghttp://aaiil.org/text/hq/englishholyqurantranslation/englishholyqurantransla.
Rahman & Masih, 2014; Rahman & Masih, 2014; Rahman, Sharezan and Masih, Mansur (2014): Increasing household debts and its relation to GDP, interest rate and house price: Malaysia’s perspective. https://mpra.ub.uni-muenchen.de/id/eprint/62365
Sahiq, Sukardi, Haron, Ismail & Othman, 2018; Sahiq, Sukardi, Haron, Ismail & Othman, 2018; Macroeconomic Determinants and Mortgage Debt Accumulation: Evidence from Malaysia ANM Sahiq, SN Sukardi, NH Haron-Journal of Academic, 2018 - researchgate.net
Shahbaz and Islam, 2011Shahbaz and Islam, 2011; Financial development and income inequality in Pakistan: an application of ARDL approach. M Shahbaz, F Islam - 2011 - mpra.ub.uni-muenchen.de
Sullivan, T., E. Warren, and J. Westbrook. (2000). The Fragile Middle Class: Americans in Debt. New Haven: Yale University Press.
Tomas, 2016) Tomas, (2016) Measuring the Natural Rate of Interest: International Trends and Determinants. FEDERAL RESERVE BANK OF SAN FRANCISCO WORKING PAPER SERIES, Working Paper 2016-11 http://www.frbsf.org/economic-research/publications/working-papers/wp2016-11.pdf
This work is licensed under a Creative Commons Attribution 4.0 International License.