Leverage—A Broader View

Manmohan Singh and Zohair Alam

No 2018/062, IMF Working Papers from International Monetary Fund

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.

Keywords: WP; bank-nonbank nexus; nonbank-bank nexus; nonbank relationship; nonbank leverage; nonbank funding; regulations; financial stability; leverage ratio; off-balance sheet; pledged collateral; bank leverage; Financial statements; Collateral; Commercial banks; Accounting standards; Bank credit; Global (search for similar items in EconPapers)
Pages: 28
Date: 2018-03-19
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Citations: View citations in EconPapers (1)

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