Corporate Responses To Currency Depreciations: Evidence From Indonesia

Several studies, both empirical and theoretical, have been mobilized to understand what happened in the 1997 Asian crisis. Some studies accentuate on the macroeconomic weaknesses, for instance, by linking speedy financial liberalization and unsound regulation or supervision on banking and financial institutions. However, it is irresponsible to blame macro economic variables as a single factor provoking financial turbulence. Meanwhile, some strands of studies focus on micro side of the story of crises. In these strands, corporate sector vulnerabilities, indicated by weak performance and high leverage accompanied by the poor governance system have frequently been cited as main sources of Asian crisis.