Oil prices uncertainty, institutional quality and debt maturity structure

Abstract

By using the gmm estimate for unbalanced panel data, the author measures the impact of oil price volatility, institutional quality on the short-term debt ratio of 206 non-financial companies in Vietnam during the period from 2011 to 2021. Control variables representing the firm-level are also added to the model to build more realistic results. The results show that oil price volatility has a positive effect on the short-term debt ratio of companies. Along with that, quality also shows a positive relationship with the company's short-term debt ratio. Moreover, when putting oil price volatility in an economy influenced by institutional quality, the impact of oil prices on short-term debt ratio shifts to an inverse relationship. This result shows that the nature of the economy and geographic location in relation to resource availability also have a significant indirect influence on the estimation results. Therefore, the study's findings can encourage policymakers to develop a long-term energy strategy that will maximize how businesses use their capital structures to adjust to shifts in institutional quality in Vietnam.