Browsing by Subject "leverage"

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  • Juselius, Mikael; Drehmann, Mathias (2016)
    Bank of Finland Research Discussion Papers 3/2016
    Also available in Oxford Bulletin of Economics and Statistics 82 ; 2 https://doi.org/10.1111/obes.12330
    In addition to leverage, the debt service burden of households and firms is an important link between financial and real developments at the aggregate level. Using US data from 1985 to 2013, we find that the debt service burden has sizeable negative effects on expenditure. Its interplay with leverage also explains several data puzzles, such as the lack of above-trend output growth during credit booms and the depth and length of ensuing recessions, without appealing to large shocks or non-linearities. Using data up to 2005, our model predicts paths for credit and expenditure that closely match actual developments before and during the Great Recession.
  • Juselius, Mikael; Drehmann, Mathias (2020)
    Oxford Bulletin of Economics and Statistics 2
    Published in Bank of Finland Research Discussion Papers 3/2016 http://urn.fi/URN:NBN:fi:bof-201604051073
    In addition to leverage, the debt service burden of households and firms is an important link between financial and real developments at the aggregate level. Using US data from 1985 to 2017, we find that the debt service burden has sizeable negative effects on expenditure. Its interplay with leverage also explains several data puzzles, including the lack of above trend output growth during credit booms and the severity of ensuing recessions, without appealing to large shocks or nonlinearities. Estimating the model with data up to 2005, it predicts credit and expenditure paths that closely match actual developments before and during the Great Recession.
  • Taipalus, Katja; Timonen, Jouni (2015)
    Bank of Finland. Bulletin 4/2015
    In a prolonged environment of exceptionally low interest rates, the authorities are responsible for ensuring the adequate monitoring of potential vulnerabilities due to low interest rates. Before measures to manage risks can be implemented, the risks must first be identified. Owing to continuous market developments, there is a strong need to update the analysis conducted by the authorities.
  • Xu, Bing (2018)
    BOFIT Discussion Papers 3/2018
    Published in China Economic Review, 54, 2019, 237-255
    By allowing large classes of movable assets to be used as collateral, the Property Law reform trans-formed the secured transactions in China. Difference-in-differences tests show firms operating with ex-ante more movable assets expand access to bank credit and prolong debt maturity. However, the reform does not seem to improve the efficiency of credit allocation, as debt capacity of ex-ante low quality firms expands the most following the reform. Credit expansion also does not lead to better firm performance. These findings are not driven by confounding factors such as improvements in creditor and property rights protection. Our results also cannot be explained by other important reforms which were introduced around the same time as the introduction of the Property Law. These include anti-tunneling and split-share reforms and amendments to the corporate tax structure in China. We conduct explicit robustness tests for these other reforms and amendments to the corporate tax structure in China. We conduct explicit robustness tests for these other reforms and hence contribute to the empirical literature on the reform process in China with new findings.