Impact of Supply Chain Disruptions on Financial Leverage

48 Pages Posted: 16 Jul 2024

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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

Suggested Citation

Ginn, William and Saadaoui, Jamel, Impact of Supply Chain Disruptions on Financial Leverage. Available at SSRN: https://ssrn.com/abstract=4896045 or http://dx.doi.org/10.2139/ssrn.4896045

William Ginn

Labcorp ( email )

Jamel Saadaoui (Contact Author)

University Paris 8

2 rue de la liberté
Saint-Denis

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