Using a broad range of uncertainty measures, we show that uncertainty dramatically slows down firms' adjustments toward their optimal capital structure. At the upper bound, the estimated speed of leverage adjustments almost halves when uncertainty is high. High quality institutions (common law...

This study examines corporate leverage during systemic banking crises in an international setting including 85 countries from 1987 to 2017. Using the historically determined component of institutions and exogenous variations in institution building, the analyses show that leverage cyclicality...