Financing Policies and Firm Vulnerability in Indonesia

Agustinus Prasetyantoko ()

MPRA Paper from University Library of Munich, Germany

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.

Keywords: capital structure; financial crisis; firm vulnerability; firm performance (search for similar items in EconPapers)
JEL-codes: D21 F31 G32 (search for similar items in EconPapers)
Date: 2008
New Economics Papers: this item is included in nep-sea
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