IDEAS home Printed from https://ideas.repec.org/a/taf/apeclt/v27y2020i13p1102-1106.html
   My bibliography  Save this article

Which factor matters for financial crises: leverage level or leverage growth?

Author

Listed:
  • Wenlong Bian
  • Tingting Ge
  • Yang Ji

Abstract

Prior studies have shown a significant impact of the leverage level on economic outcomes. This study extends the literature by examining the role of leverage growth in predicting the occurrence of financial crises. Based on a dataset of 42 economies over the period 1980–2017, the results indicate a positive and significant association between leverage growth and the likelihood of financial crises. Moreover, leverage level plays no relevant role in predicting the financial crises after leverage growth has been controlled for. Further analysis also confirms the contribution of relative sectoral leverage growth to financial crises. Specifically, both the difference between the private and the government leverage growth, and the difference between the household and non-financial corporate leverage growth are positively associated with the likelihood of financial crises. These findings suggest that we should pay much more attention to leverage growth and its impacts on financial crises.

Suggested Citation

  • Wenlong Bian & Tingting Ge & Yang Ji, 2020. "Which factor matters for financial crises: leverage level or leverage growth?," Applied Economics Letters, Taylor & Francis Journals, vol. 27(13), pages 1102-1106, June.
    • Handle: RePEc:taf:apeclt:v:27:y:2020:i:13:p:1102-1106
    DOI: 10.1080/13504851.2019.1667948
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/13504851.2019.1667948
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/13504851.2019.1667948?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:apeclt:v:27:y:2020:i:13:p:1102-1106. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RAEL20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.