NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Leverage Across Firms, Banks, and Countries

Sebnem Kalemli-Ozcan, Bent Sorensen, Sevcan Yesiltas

NBER Working Paper No. 17354
Issued in August 2011
NBER Program(s):   IFM

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.

download in pdf format
   (844 K)

email paper

This paper is available as PDF (844 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w17354

Published:

Users who downloaded this paper also downloaded these:
Gourinchas, Rey, and Truempler w17353 The Financial Crisis and The Geography of Wealth Transfers
Barkbu, Eichengreen, and Mody w17361 International Financial Crises and the Multilateral Response: What the Historical Record Shows
Claessens, Tong, and Wei w17360 From the Financial Crisis to the Real Economy: Using Firm-level Data to Identify Transmission Channels
Hale w17356 Bank Relationships, Business Cycles, and Financial Crises
Cetorelli and Goldberg w17355 Liquidity management of U.S. global banks: Internal capital markets in the great recession
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us