Leverage Across Firms, Banks, and Countries

Sebnem Kalemli-Ozcan, Bent Sorensen and Sevcan Yesiltas

No 17354, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We present new stylized facts on bank and firm leverage for 2000-2009 using extensive internationally comparable micro level data from several countries. The main result is that there was very little buildup in leverage for the average non-financial firm and commercial bank before the crisis, but the picture was quite different for large commercial banks in the United States and for investment banks worldwide. We document the following patterns: a) there was an increase in leverage ratios of investment banks and financial firms during the early 2000s; b) there was no visible increase for commercial banks and non-financial firms; c) off balance-sheet items constitute a big fraction of assets, especially for large commercial banks in the United States; d) the leverage ratio is procyclical for investment banks and for large commercial banks in the United States; e) banks in emerging markets with tighter bank regulation and stronger investor protection experienced significantly less deleveraging during the crisis. These results show that excessive risk taking before the crisis was not easily detectable because the risk involved the quality rather than the amount of assets.

JEL-codes: F3 (search for similar items in EconPapers)
Date: 2011-08
New Economics Papers: this item is included in nep-cba
Note: IFM
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Citations: View citations in EconPapers (45)

Published as Kalemli-Ozcan, Sebnem & Sorensen, Bent & Yesiltas, Sevcan, 2012. "Leverage across firms, banks, and countries," Journal of International Economics, Elsevier, vol. 88(2), pages 284-298.
Published as Leverage across Firms, Banks, and Countries , Sebnem Kalemli-Ozcan, Bent Sorensen, Sevcan Yesiltas. in Global Financial Crisis , Engel, Forbes, and Frankel. 2012

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Related works:
Journal Article: Leverage across firms, banks, and countries (2012)
Chapter: Leverage across Firms, Banks, and Countries (2011)
Working Paper: Leverage Across Firms, Banks and Countries (2011)
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