In a NK model with two types of rational agents, savers and capitalists, and non-maximizing banks, financial shocks do affect the macroeconomic dynamics depending on banks' behaviour as for their leverage ratio. We first show that the level of banks' leverage - which may be imposed by banks...

This paper investigates the role of off-balance sheet securitization on US bank leverage pro-cyclicality. Effective leverage (taking into account off-balance sheet securitization) is especially relevant for the US, where GAAP accounting rules for securitization allowed until 2009 a...

Detecting whether banks' leverage is indeed procyclical is relevant to support the view that booms and crises may be reinforced by some sort of supply side financial accelerator, whilst finding a plausible explanation of banks' behaviour is crucial to trace the road for a sensible reform of...