Leverage, wholesale funding and national risk attitude
This study examines the procyclicality of leverage among financial institutions using international evidence. Procyclicality occurs when financial institutions actively manage their balance sheets and use non-equity funding to finance change in assets. Since wholesale funding allows financial institutions to adjust their financial leverage quickly, we investigate whether financial institutions that rely more on wholesale funding (traditional deposit funding) show a higher (lower) degree of leverage procyclicality. Using balance sheet data for financial institutions of 49 countries, this study identifies a positive link between assets growth and leverage growth. In addition, we show that the positive impact of wholesale funding on procyclicality varies across market condition and national risk attitude.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 23 (2013)
Issue (Month): C ()
|Contact details of provider:|| Web page: http://www.elsevier.com/locate/intfin|
When requesting a correction, please mention this item's handle: RePEc:eee:intfin:v:23:y:2013:i:c:p:179-195. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If references are entirely missing, you can add them using this form.