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Leverage Bubbles

Author

Listed:
  • Fares Triki

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper investigates the relation between liquidity and asset prices. It shows that, when banks balance sheets are marked to market and banks are targeting a financial leverage level - a situation similar to current environment - formation of Leverage Bubble phenomenon and suggests a new regulation rule based on a Dynamic Leverage Ratio (DLR) rule.

Suggested Citation

  • Fares Triki, 2009. "Leverage Bubbles," Post-Print halshs-00390688, HAL.
    • Handle: RePEc:hal:journl:halshs-00390688
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00390688
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    File URL: https://shs.hal.science/halshs-00390688/document
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    References listed on IDEAS

    as
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