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Indonesia’s Ponzi Economy: Does Financial Crisis Give a Lesson

  • Agustinus, Prasetyantoko
  • Luhur, Fajar-Marta

After ten years of Asian crisis, it is still unclear what the roots of crises are really. This paper seeks to the explanation of the evolution of the capitalism system in Indonesia for gaining an important indication of the root of crisis as well as the future risk of crises of the Indonesia’s economy. This paper uses the micro evidence based on firm-level data in order to understand the behaviour of economic agents due to financial crisis by a question of whether the behaviour changes. Specifically, this paper is concerned with the financing behaviour of the firms in understanding the capitalism system which exists and evolves in Indonesia today based on the Minsky’s taxonomy (hedge, speculative or ponzi system of capitalism). Furthermore, this paper should have an implication in policies level by giving an early warning, whether Indonesia is still vulnerable to the crisis in the future. This paper begins by analyzing the financial ratio of listed companies in Indonesia by using the accounting data provided by the Jakarta Stock Exchange (JSX) and Indonesian Capital Market Directory published by ECFIN (Institute for Economic and Finance Research) in various publications

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 6776.

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Date of creation: Jan 2008
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Handle: RePEc:pra:mprapa:6776
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  1. Hyman P. Minsky, 1992. "The Financial Instability Hypothesis," Economics Working Paper Archive wp_74, Levy Economics Institute.
  2. Fran Westermann & Romain Ranciere & Aaron Tornell, 2004. "Crises and Growth: A Re-evaluation," 2004 Meeting Papers 130, Society for Economic Dynamics.
  3. Giancarlo Corsetti & Paolo Pesenti & Nouriel Roubini, 1998. "What Caused the Asian Currency and Financial Crisis? Part I: A Macroeconomic Overview," NBER Working Papers 6833, National Bureau of Economic Research, Inc.
  4. Jan A. Kregel, 1998. "Yes, 'It' Did Happen Again: A Minsky Crisis Happened in Asia," Economics Working Paper Archive wp_234, Levy Economics Institute.
  5. Steven M. Fazzari & R. Glenn Hubbard & BRUCE C. PETERSEN, 1988. "Financing Constraints and Corporate Investment," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 19(1), pages 141-206.
  6. Philip Arestis, 2002. "Financial crisis in Southeast Asia: dispelling illusion the Minskyan way," Cambridge Journal of Economics, Oxford University Press, vol. 26(2), pages 237-260, March.
  7. Hausmann, Ricardo & Panizza, Ugo, 2003. "On the determinants of Original Sin: an empirical investigation," Journal of International Money and Finance, Elsevier, vol. 22(7), pages 957-990, December.
  8. Jenny Corbett & Gregor Irwin & David Vines, 1999. "From Asian Miracle to Asian Crisis: Why Vulnerability, Why Collapse?," RBA Annual Conference Volume, in: David Gruen & Luke Gower (ed.), Capital Flows and the International Financial System Reserve Bank of Australia.
  9. Kumar, R. & Debroy, B., 1999. "The Asian Crisis: an Alternative View," Papers 59, Asian Development Bank.
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