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Financing Policies and Firm Vulnerability in Indonesia

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Author Info
Prasetyantoko, Agustinus

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Abstract

This paper argues that financing policies of the firms are central in propagating financial crisis. Studies on the linkage between macro-fragility and micro-vulnerability around financial debacle are common, especially after East-Asian and Mexican crisis in the 1990s. By focusing on the case of Indonesia, this paper investigates the relationship between the financing choice of the firms and their vulnerability in the mid of macro economic fluctuation. First step is to examine the impacts of macro variables on capital structure. Second is to investigate the impact of capital structure and firm performance. Accordingly, this paper takes into account the impact of macroeconomic fluctuation on firm healthiness where capital structure choices play pivotal role in the mechanism.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 6533.

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Date of creation: 2008
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Handle: RePEc:pra:mprapa:6533

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Related research
Keywords: capital structure; financial crisis; firm vulnerability; firm performance;

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Find related papers by JEL classification:
D21 - Microeconomics - - Production and Organizations - - - Firm Behavior
G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Capital and Ownership Structure
F31 - International Economics - - International Finance - - - Foreign Exchange

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