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Financing Policies and Firm Vulnerability in Indonesia

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  • Prasetyantoko, Agustinus

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.

Suggested Citation

  • Prasetyantoko, Agustinus, 2008. "Financing Policies and Firm Vulnerability in Indonesia," MPRA Paper 6533, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:6533
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    File URL: https://mpra.ub.uni-muenchen.de/6533/1/MPRA_paper_6533.pdf
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    More about this item

    Keywords

    capital structure; financial crisis; firm vulnerability; firm performance;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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