The impact of macroeconomic variables on SMEs in Malaysia

Small and Medium Enterprises (SMEs) in Malaysia have gained a prominent role as the significant contributor to the economic growth. However, the world nowadays is heading towards economic downturn. The stability of macroeconomic variables promotes profitability of SMEs which propels them to a stage...

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Bibliographic Details
Published in:Journal of physics. Conference series 2017-09, Vol.890 (1), p.12138
Main Authors: Halim, F A, Malim, M R, Derasit, Z, Rani, R M, Rashid, S S
Format: Article
Language:English
Subjects:
Economic development
Economics
Interest rates
Macroeconomics
Multiple regression analysis
Physics
Profitability
Small & medium sized enterprises-SME
Small business
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Summary:Small and Medium Enterprises (SMEs) in Malaysia have gained a prominent role as the significant contributor to the economic growth. However, the world nowadays is heading towards economic downturn. The stability of macroeconomic variables promotes profitability of SMEs which propels them to a stage where they can access financing for sustaining growth. Therefore, it is apparent that the behaviour of the macroeconomic variables plays a major part in determining the nation's backbone in surviving the economic downturn. The objective of this study is to evaluate the impact of macroeconomic variables on the profitability of SMEs in Malaysia using multiple regression analysis. The findings revealed that the exchange rate has a small positive impact on SME GDP growth rate (10.81%), the interest rate has a strong positive impact (60.74%), while the inflation rate has a strong negative impact (-53.89%). Therefore, it can be concluded that the interest rate and inflation rate have significant impacts on the profitability of SMEs in Malaysia.
ISSN:1742-6588
1742-6596
DOI:10.1088/1742-6596/890/1/012138