Impact of Supply Chain Disruptions on Financial Leverage
48 Pages Posted: 16 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
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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