Impact of Supply Chain Disruptions on Financial Leverage
24 Pages Posted: 17 Jul 2024
There are 3 versions of this paper
Impact of Supply Chain Disruptions on Financial Leverage
Impact of Supply Chain Disruptions on Financial Leverage
Impact of Supply Chain Disruptions on Financial Leverage
Date Written: July 11, 2024
Abstract
This study investigates the impact of supply disruptions on financial leverage (debt-equity ratio) in the U.S. economy from 1998:Q1 to 2024:Q1. The study employs a linear and non-linear Local Projections (LP) and Bayesian Vector Autoregression (BVAR) models to explore dynamic relationships. While the LP models reveal that a supply chain shock negatively affects leverage with statistically significant results, there is no evidence of state dependence. The BVAR model suggest that a supply chain shock is disruptive via reduction (an increase) in output (inflation), accompanied by lower leverage.
Keywords: Supply Chain, Leverage, Local Projections, Economic Conditions, Bayesian VAR
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