Macroeconomic determinants of US corporate leverage

Seema Narayan, Minh Ngoc Thi Bui, Yishuai Ren, Chaoqun Ma

Research output: Contribution to journalArticleResearchpeer-review

7 Citations (Scopus)


Macroeconomic factors are regarded as important determinants of corporate leverage decisions, although their importance during good and bad times is less understood. We examine the effect of macroeconomic factors on total, long-term and short-term corporate leverage (debt to total assets) decisions during: (1) the expansionary and contractionary phases of the business cycle; and (2) the financial crisis (FC) and non-FC period. This paper explains leverage decisions for S&P 500 non-financial firms over the period 1985–2017. Our main results are as follows. Short-term leverage and interest rate are positively related. Long-term leverage, on the other hand, is negatively associated with inflation. Interest rate and inflation effects are stronger during the expansionary phases of the business cycle and non-FC period, while the impact of US economic activity is stronger during the contractionary phases of the US business cycle.

Original languageEnglish
Article number105646
Number of pages14
JournalEconomic Modelling
Publication statusPublished - Nov 2021
Externally publishedYes


  • Business cycles
  • Financial crisis
  • Leverage
  • Macroeconomic factors
  • S&P 500

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