The purpose of this study is to analyze the relationship between financial
constraint factors that can affect the chosen of leasing for the firm in
Malaysia. The sample of data consist of 1150 firms including listed firm,
unlisted firm and SMEs with the total number of firm-years observation
are 8339. This study covers 7 years period from year 2007 until 2014.
The dependent variables are lease ratio and debt ratio while the
independent variables are the financial constraint determinant such as
internal funds, growth, collateral, and size. This study also include
control variables such as uniqueness (R&D expenses), tax loss and
macroeconomics factor such as based lending rates (BLR). The results
indicate that not all financial constraint firms tend to used lease
financing compare to debt financing. It depends on what types of
financial constraint that the firm faces. For this analysis, the firm that
have financial constraint in internal funds, collateral and size tend to
used lease compare to debt financing. However, for the firms have less
growth opportunities, it is difficult for them to choose either lease or debt
financing because of their future survival.
