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Is There Too Much Business Debt?

Author

Listed:
  • Anna Kovner
  • Brandon Zborowski

Abstract

By many measures, nonfinancial corporate debt has been increasing as a share of GDP and assets since 2010. As the May Federal Reserve Financial Stability Report explained, high business debt can be a financial stability risk because heavily indebted corporations may need to cut back spending more sharply when shocks occur. Our bloggers review measures of corporate leverage in the United States and find that, although corporate debt has soared, concerns about debt growth are mitigated in part by higher corporate cash flows.

Suggested Citation

  • Anna Kovner & Brandon Zborowski, 2019. "Is There Too Much Business Debt?," Liberty Street Economics 20190529, Federal Reserve Bank of New York.
  • Handle: RePEc:fip:fednls:87337
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    File URL: https://libertystreeteconomics.newyorkfed.org/2019/05/is-there-too-much-business-debt.html
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    More about this item

    Keywords

    leverage; financial stability; debt;

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance

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