ABSTRACT
Chapter 4 argued that Indonesia’s financial structure was steeply leveraged during the finance boom in the 1990s due to the private sectors’ aggressive fund raising in offshore debt markets.1 This fund raising was supported by the enthusiastic lending behaviour of offshore lenders at the time, and in particular, that of offshore commercial banks. Using Kindleberger’s terminology, offshore lenders were caught up in a ‘mania’ to finance Indonesian borrowers during the period. Offshore syndicated debt, such as offshore syndicated loans, FRNs and FRCDs, was the favoured tool for leveraging the Indonesian financial structure and for integrating Indonesian financial markets into global financial markets. In other words, offshore syndicated debt drove the trend towards the financial complexity of the Indonesian economy.
