Leverage, wholesale funding and national risk attitude

Michaël Dewally and Yingying Shao

Journal of International Financial Markets, Institutions and Money, 2013, vol. 23, issue C, 179-195

Abstract: This study examines the procyclicality of leverage among financial institutions using international evidence. Procyclicality occurs when financial institutions actively manage their balance sheets and use non-equity funding to finance change in assets. Since wholesale funding allows financial institutions to adjust their financial leverage quickly, we investigate whether financial institutions that rely more on wholesale funding (traditional deposit funding) show a higher (lower) degree of leverage procyclicality. Using balance sheet data for financial institutions of 49 countries, this study identifies a positive link between assets growth and leverage growth. In addition, we show that the positive impact of wholesale funding on procyclicality varies across market condition and national risk attitude.

Keywords: Capital structure; Leverage; Wholesale funding; National culture (search for similar items in EconPapers)
JEL-codes: G21 G28 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1042443112000881
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:intfin:v:23:y:2013:i:c:p:179-195

DOI: 10.1016/j.intfin.2012.10.001

Access Statistics for this article

Journal of International Financial Markets, Institutions and Money is currently edited by I. Mathur and C. J. Neely

More articles in Journal of International Financial Markets, Institutions and Money from Elsevier
Bibliographic data for series maintained by Catherine Liu ().