Is the leverage of European banks procyclical?
Rent the article at a discountRent now
* Final gross prices may vary according to local VAT.Get Access
Detecting whether banks’ leverage is indeed procyclical is relevant to support the view that booms and crises may be reinforced by some sort of supply side financial accelerator, whilst finding a plausible explanation of banks’ behaviour is crucial to trace the road for a sensible reform of financial regulation and managers’ incentives. By analyzing a large sample of European banks, we show that procyclical leverage appears to be well entrenched in the behaviour of those banks for which investment banking prevails over the traditional commercial banking activity.
- Is the leverage of European banks procyclical?
Volume 45, Issue 3 , pp 1251-1266
- Cover Date
- Print ISSN
- Online ISSN
- Springer Berlin Heidelberg
- Additional Links
- Financial regulation
- Industry Sectors