The Determinants of Credit Risk in Tiong Nam Logistics Holdings Berhad

Abstract

The study examined the impact of internal and external factors towards credit risk in Tiong Nam Logistics Holdings Berhad. Debt to Income was used as dependent variable represented the credit risk. Debt to Income was calculated by total liability divided by total income. This study obtained time series regression analysis of five years from 2014 to 2018. The findings resulted debt to equity is the most significant variable to debt to income which influenced credit risk of the company. Based on the result for Model 1, debt to equity recorded the moderate significant and positively influenced to debt to equity when only the internal factors were tested. Whereas, when external factors were examined in Model 2 there was no variable giving significant influenced to debt to income. Meanwhile, for Model 3, there was only debt to equity has statically significant and positively influenced to debt to income out of all variables when internal and external factors were tested together. Thus, debt to equity is the most significant variable to debt to income which will arise the credit risk in Tiong Nam Logistics Holdings Berhad.

Keywords: Credit Risk, Debt to Equity, Debt to Income, Internal Factors, External Factors

JEL Classification: G32, G33