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Hedge fund leverage: 2002–2017

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  • Bing Liang
  • Liping Qiu

Abstract

Using a large panel data set, we investigate the dynamics of hedge fund leverage from 2002 to 2017 and find considerable variations in both time series and cross section. More than 70% of hedge funds use leverage and almost half of the leveraged funds are levered through margin borrowing. On average, hedge funds decreased leverage prior to the beginning of the financial crisis, with leverage remaining below the pre‐crisis levels. We find that the level of leverage and its changes are related to fund characteristics such as age, governance, performance, risk, fees, liquidity, survival, and the birth of a new fund.

Suggested Citation

  • Bing Liang & Liping Qiu, 2019. "Hedge fund leverage: 2002–2017," European Financial Management, European Financial Management Association, vol. 25(4), pages 908-941, September.
    • Handle: RePEc:bla:eufman:v:25:y:2019:i:4:p:908-941
    DOI: 10.1111/eufm.12202
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    Cited by:

    1. Daniel Barth & Laurel Hammond & Phillip Monin, 2020. "Leverage and Risk in Hedge Funds," Working Papers 20-02, Office of Financial Research, US Department of the Treasury.

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