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Financing Constraint and Firm Investment Following a Financial Crisis in Indonesia

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  • Agustinus Prasetyantoko

    (GATE - Groupe d'analyse et de théorie économique - UL2 - Université Lumière - Lyon 2 - ENS LSH - Ecole Normale Supérieure Lettres et Sciences Humaines - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper deals with the sensitivity relation between firm-level investment and its internal liquidity by splitting samples into two different groups of firms, which are tradable (T) and non-tradable (N) sector. The study includes 226 listed companies in Jakarta Stock Exchange (JSX) by at least five consecutive years in the period of 1994 – 2004. This paper finds that during boom period, N-sector is less financially constrained, but in burst period, N-sector has greater financial constraints. It leads us to the explanation that during boom period N-sector grows faster than T-sector, but when crisis hits T-sector recovers more easily. By employing panel data analysis, our findings support an argument that asymmetric financing opportunities among N and T-sector are common in developing countries. Accordingly, this paper provides important explanations on firm-level investment behavior around financial crisis, which could be pivotal considerations in monetary and other relevant policies

Suggested Citation

  • Agustinus Prasetyantoko, 2006. "Financing Constraint and Firm Investment Following a Financial Crisis in Indonesia," Post-Print halshs-00133964, HAL.
    • Handle: RePEc:hal:journl:halshs-00133964
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00133964
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    References listed on IDEAS

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    Cited by:

    1. Joel , ISABIRYE, 2021. "Impact Of Economic Crises On Firms: A Literature Review," Annals of Spiru Haret University, Economic Series, Universitatea Spiru Haret, vol. 21(3), pages 225-250.

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    Keywords

    asymmetric financing opportunities; financing constraint; firm investment; financial crisis;
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