activities. For this purpose, I propose a novel measure of synthetic leverage, which can be estimated based on publicly available … information. In the empirical application, I show that German equity funds have increased their risk-taking via synthetic leverage …

Motivated by the build-up of shadow bank leverage prior to the financial crisis of 2007-2008, I develop a nonlinear … macroeconomic model featuring excessive leverage accumulation and endogenous financial crises to capture the observed dynamics and … to quantify the build-up of financial fragility. I use the model to illustrate that extensive leverage makes the shadow …