amount of collateral assets accepted, (ii) the level of leverage and (iii) the level of trust and confidence. As credit … financial system. As trust began to recede, so did leverage and the amount of assets accepted as collateral, leading to a …

households and the merchant bank provides funds to firms. Merchant banks borrow collateralized short-term funds from deposit … banks. In a financial downturn, as the value of collateral decreases, the merchant bank must sell assets on short notice …

We assess the quantitative implications of the re-use of collateral on financial market leverage, volatility, and …-use frees up collateral that can be used to back more transactions. Re-use thus contributes to the build-up of leverage and … lead to excessive leverage and lower welfare. So the analysis in this paper provides a rationale for limiting, yet not …

leverage effect …

We revisit the relation between equity returns and financial leverage through the lens of a trade-off model with costly … returns depend on whether a firm's leverage is above or below its target leverage. The data support the model predictions …. Controlling for leverage, overlevered (underlevered) firms earn higher (lower) returns. Controlling for target leverage the …