Impact of supply chain pressures on financial leverage

William Ginn and Jamel Saadaoui

International Review of Financial Analysis, 2025, vol. 98, issue C

Abstract: This study investigates the impact of supply shocks on financial leverage (debt-equity ratio) in the U.S. economy from 1998:Q1 to 2024:Q2. The study employs a linear and non-linear Local Projections (LP) and Bayesian Vector Autoregression (BVAR) models to explore dynamic relationships. While the LP models reveal that a supply chain shock negatively affects leverage with statistically significant results, there is no evidence of state dependence. The BVAR model suggest that a supply chain shock is disruptive via reduction (an increase) in output (inflation), accompanied by lower leverage.

Keywords: Supply chain; Leverage; Local projections; Economic conditions; Bayesian VAR (search for similar items in EconPapers)
JEL-codes: B22 F44 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:98:y:2025:i:c:s1057521924008159

DOI: 10.1016/j.irfa.2024.103883

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