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Leverage—A Broader View

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  • Mr. Manmohan Singh
  • Zohair Alam

Abstract

Traditional measures of leverage in the financial system tend to reflect bank balance sheet data. The paper argues that these traditional, bank-centric measures should be augmented by considering pledged collateral in the financial system since pledged collateral provides a measure of an important part of nonbank funding to banks. From a policy perspective, the paper suggests that a broader view on leverage will enhance our understanding of global systemic risk, and complement the theoretical work in this field by providing a link from micro-level leverage data to macro aggregates such as credit to the economy.

Suggested Citation

  • Mr. Manmohan Singh & Zohair Alam, 2018. "Leverage—A Broader View," IMF Working Papers 2018/062, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2018/062
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    References listed on IDEAS

    as
    1. Hyun Song Shin, 2010. "Financial intermediation and the post-crisis financial system," BIS Working Papers 304, Bank for International Settlements.
    2. Mr. Stijn Claessens & Mr. Lev Ratnovski, 2014. "What is Shadow Banking?," IMF Working Papers 2014/025, International Monetary Fund.
    3. John Geanakoplos, 2009. "The Leverage Cycle," Cowles Foundation Discussion Papers 1715R, Cowles Foundation for Research in Economics, Yale University, revised Jan 2010.
    4. Joon-Ho Hahm & Hyun Song Shin & Kwanho Shin, 2013. "Noncore Bank Liabilities and Financial Vulnerability," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 45, pages 3-36, August.
    5. Adrian Van Rixtel & Gabriele Gasperini, 2013. "Financial crises and bank funding: recent experience in the euro area," BIS Working Papers 406, Bank for International Settlements.
    6. Moritz Schularick & Alan M. Taylor, 2012. "Credit Booms Gone Bust: Monetary Policy, Leverage Cycles, and Financial Crises, 1870-2008," American Economic Review, American Economic Association, vol. 102(2), pages 1029-1061, April.
    7. Mr. Manmohan Singh, 2012. "The (Other) Deleveraging," IMF Working Papers 2012/179, International Monetary Fund.
    8. Mr. Peter Breuer, 2000. "Measuring off-Balance-Sheet Leverage," IMF Working Papers 2000/202, International Monetary Fund.
    9. Mr. Manmohan Singh, 2011. "Velocity of Pledged Collateral: Analysis and Implications," IMF Working Papers 2011/256, International Monetary Fund.
    10. John Geanakoplos, 2010. "The Leverage Cycle," NBER Chapters, in: NBER Macroeconomics Annual 2009, Volume 24, pages 1-65, National Bureau of Economic Research, Inc.
    11. Mr. Manmohan Singh & Mr. Zoltan Pozsar, 2011. "The Nonbank-Bank Nexus and the Shadow Banking System," IMF Working Papers 2011/289, International Monetary Fund.
    12. Ingo Fender & Patrick McGuire, 2010. "Bank structure, funding risk and the transmission of shocks across countries: concepts and measurement," BIS Quarterly Review, Bank for International Settlements, September.
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    Cited by:

    1. Adrian, Tobias & Kiff, John & Shin, Hyun Song, 2018. "Liquidity, Leverage, and Regulation Ten Years after the Global Financial Crisis," CEPR Discussion Papers 13350, C.E.P.R. Discussion Papers.

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