We study default and endogenous leverage in the laboratory. To this purpose, we develop a general equilibrium model of … collateralized borrowing amenable to laboratory implementation and gather experimental data. In the model, leverage is endogenous …

higher levels of leverage lead to a greater inequality among agents. Furthermore, greater leverage increases the frequency of … key difference in the relation between leverage and assets observed for different bank types. Lowering credit frictions … leads to an increasingly procyclical behavior of leverage, which is typical for investment banks. Nevertheless, the impact …

higher levels of leverage lead to a greater inequality among agents. Furthermore, greater leverage increases the frequency of … key difference in the relation between leverage and assets observed for different bank types. Lowering credit frictions … leads to an increasingly pro-cyclical behavior of leverage, which is typical for investment banks. Nevertheless, the impact …

We assess the quantitative implications of the re-use of collateral on financial market leverage, volatility, and …-use frees up collateral that can be used to back more transactions. Re-use thus contributes to the build-up of leverage and … lead to excessive leverage and lower welfare. So the analysis in this paper provides a rationale for limiting, yet not …