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Impact of supply chain pressures on financial leverage

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  • Ginn, William
  • Saadaoui, Jamel

Abstract

This study investigates the impact of supply shocks on financial leverage (debt-equity ratio) in the U.S. economy from 1998:Q1 to 2024:Q2. The study employs a linear and non-linear Local Projections (LP) and Bayesian Vector Autoregression (BVAR) models to explore dynamic relationships. While the LP models reveal that a supply chain shock negatively affects leverage with statistically significant results, there is no evidence of state dependence. The BVAR model suggest that a supply chain shock is disruptive via reduction (an increase) in output (inflation), accompanied by lower leverage.

Suggested Citation

  • Ginn, William & Saadaoui, Jamel, 2025. "Impact of supply chain pressures on financial leverage," International Review of Financial Analysis, Elsevier, vol. 98(C).
    • Handle: RePEc:eee:finana:v:98:y:2025:i:c:s1057521924008159
    DOI: 10.1016/j.irfa.2024.103883
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    More about this item

    Keywords

    Supply chain; Leverage; Local projections; Economic conditions; Bayesian VAR;
    All these keywords.

    JEL classification:

    • F44 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Business Cycles
    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics

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