intrinsic to the capital market behaviour. Theoretically, the leverage of the firms appears to be a major determinant of the … volatility of prices and returns. At the same time, the leverage has also got a role at both levels: the capital structure of the … firm and the investors’ strategy. We examine the return and volatility in relation to leverage by considering different …

We review the theory of leverage developed in collateral equilibrium models with incomplete markets. We explain how … leverage tends to boost asset prices, and create bubbles. We show how leverage can be endogenously determined in equilibrium …, and how it depends on volatility. We describe the dynamic feedback properties of leverage, volatility, and asset prices …

leverage, volatility and the riskless interest rate. We find that estimated coefficients for these variables are consistent … premia is approximately 23%. Volatility and leverage by themselves also have substantial explanatory power for credit default … data. We therefore conclude that leverage, volatility and the riskfree rate are important determinants of credit default …

, size, value, momentum, cashflow volatility, leverage, investment growth, term risk, and default risk. We empirically test …

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 …

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 …