Leverage Can Be Highly Counterproductive

Dimitris N. Chorafas
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Dimitris N. Chorafas: New York Academy of Sciences

Chapter 5 in Capitalism Without Capital, 2009, pp 91-112 from Palgrave Macmillan

Abstract: Abstract Leverage, or gearing, was originally a term describing the use of ownership as a basis for borrowing. In addition, the term refers to the pyramiding of debt so that earnings (but also losses) increase in greater proportion than those based on equity alone. Shakespeare’s Polonius advised his son: “Neither a borrower nor a lender be,” let alone a leveraged borrower or lender to geared people and companies.

Keywords: Credit Risk; Hedge Fund; Credit Default Swap; Investment Bank; Credit Institution (search for similar items in EconPapers)
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:pal:pmschp:978-0-230-25102-1_5

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DOI: 10.1057/9780230251021_5

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