| This paper argues that financing policies of the firms are central in propagating financial crisis. Studies on the linkage of 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 linkage of financing choice of the firms and their vulnerability by considering the determinant of macro economic variables. First step is examining the impacts of macro variables on capital structure. Afterwards, the relation of capital structure and firm performance is investigated for gaining better explanation of the impact of the financing policies on firm performance. Accordingly, this paper takes into account the impact of macroeconomic fluctuation on firm healthiness in where capital structure choices play pivotal role in the mechanism. |