Credit frictions, financial leverage and assets prices: nonlinear dynamic interrelations

Demchuk Natalia Ivanivna
Doctor of Economics, Associate Professor, Professor of Department of Finance,
Pavlenko Oksana Pavlivna
Candidate of Economic Sciences, Associate Professor, Associate Professor of Department of Finance,
Dnepropetrovsk State Agrarian and Economic University, Ukraine

  • The main purpose of the paper is to develop the ideas of procyclical leverage behavior and reverse of the normal demand for assets emphasized by Adrian and Shin (2008). We analyze nonlinear interrelations between credit frictions, banks’ balance sheets, leverage, and assets prices in the structure of reinforcing and balancing feedback loops. Also we develop an Adrian and Shin’s interesting hypothesis of about fundamental changes of the microeconomic foundations of demand curve in conditions of lending expanding.
  • credit frictions, financial leverage, assets prices, reinforcing and balancing feedback loop.
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  • Demchuk N. I. Credit frictions, financial leverage and assets prices: nonlinear dynamic interrelations [Internet source] / N. I. Demchuk, O. P. Pavlenko // Economic Processes Management: International Scientific E-Journal. – 2014. – № 4. – Access mode: http://epm.fem.sumdu.edu.ua/download/2014_4/2014_4_2.pdf
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