In economics, leverage can be divided into broad sense and narrow sense, and narrow sense refers to "financial leverage". When an enterprise is short of its own funds, it can borrow money to raise funds, put them into production and get more benefits. Is to do your own thing with other people's money. But there are risks. If the enterprise loses money and the loss is greater than the amount of its own funds, it will be insolvent. General enterprises will find a suitable balance point, which can not only make more money, but also ensure controllable risks. This indicator is called "asset-liability ratio".
Leverage in a broad sense covers all economic behaviors of "taking small bets to make big ones", but the core is borrowing. For example, in the futures market, you have one dollar, but the market allows you to place an order of ten dollars. If you lose a dollar during the period, you will be forced to quit.
Leverage in macroeconomics works by using multiples of capital flows. Such as raising interest rates and cutting interest rates. The interest rate of plus or minus 0. 1% seems small, but the capital flow is not one-off, but repeated many times, so the effect will be magnified many times. Why do you say that? For example, Zhang San borrowed100000 from the bank. He may go shopping at the mall immediately, and the mall will deposit the money in the bank at night. The bank gave a loan to Li Si, who started the company, and the money was still in the bank account. The bank still has so much money, only two more debt relationships.
When * * * raises or lowers the interest rate, it will also play a role in the multi-level lending relationship, thus producing an amplification effect.
Changing the bank reserve ratio is similar.
"De-leverage" is a process in which a company or individual reduces the use of financial leverage. The trend of returning the original "borrowed" money by various means (or tools).
When the capital market is improving, the high income brought by this model makes people ignore the existence of high risks. When the capital market began to decline, the negative effect of leverage began to stand out, and the risk was rapidly amplified. For enterprises and institutions with excessive leverage, rising asset prices can make them easily get high returns, and once asset prices fall, the losses will be huge and exceed capital, which will soon lead to bankruptcy. After the outbreak of the financial crisis, the risk of high leverage began to be recognized by more people, and enterprises and institutions began to consider "deleveraging" one after another, reducing debts by selling assets and gradually repaying debts. This process has caused the prices of most assets such as stocks, bonds and real estate to fall.
The "deleveraging" of a single company or institution will not have much impact on the market and economy. But if the whole market enters this process, most institutions and investors are forced or take the initiative to spit out the money borrowed by leverage in the past, then the impact is obviously extraordinary.
During the economic boom, the financial market was flooded with a large number of complex and highly leveraged investment tools. If most institutions and investors join the ranks of "deleveraging", these investment tools will be dissolved, the derivatives market will also shrink, and related industries will be hurt. With the sharp decrease of market liquidity, it will lead to economic recession.
Question 2: What is deleveraging? What is "ingot removal"? -the phenomenon under the financial crisis. Simply put, "leverage" refers to borrowing money for investment operations and obtaining high returns with less principal. This model was adopted by many enterprises and institutions before the outbreak of the financial crisis, especially investment banks, with a high degree of leverage. When the capital market is improving, the high income brought by this model makes people ignore the existence of high risks. When the capital market began to decline, the negative effect of leverage began to stand out, and the risk was rapidly amplified. For enterprises and institutions with excessive leverage, rising asset prices can make them easily get high returns, and once the capital price falls, the losses will be huge and exceed the capital, which will soon lead to bankruptcy. After the outbreak of the financial crisis, the risk of high leverage began to be recognized by more people, and enterprises and institutions began to consider "deleveraging" one after another, reducing debts by selling assets and gradually repaying debts. This process has caused the prices of most assets such as stocks, bonds and real estate to fall. To sum up, "deleveraging" is a process in which a company or individual reduces the use of financial leverage. The trend of returning the original "borrowed" money by various means (or tools).
Question 3: What does deleveraging in China mainly mean? "deleveraging" is a process in which a company or individual reduces the use of financial leverage. The trend of returning the original "borrowed" money through various means (or tools), such as down payment in the property market and fund allocation in the stock market. , it is small and broad, and deleveraging is a small part. I hope it will help you, and I hope it will be adopted!
Question 4: What does the country mean by deleveraging recently? 1 overview
When the capital market is improving, the high income brought by this model makes people ignore the existence of high risks. When the capital market began to decline, the negative effect of leverage began to stand out, and the risk was rapidly amplified. For enterprises and institutions with excessive leverage, rising asset prices can make them easily get high returns, and once asset prices fall, the losses will be huge and exceed capital, which will soon lead to bankruptcy. After the outbreak of the financial crisis, the risk of high leverage began to be recognized by more people, and enterprises and institutions began to consider "deleveraging" one after another, reducing debts by selling assets and gradually repaying debts. This process has caused the prices of most assets such as stocks, bonds and real estate to fall.
To sum up, "deleveraging" is a process in which a company or individual reduces the use of financial leverage. The trend of returning the original "borrowed" money by various means (or tools).
The "deleveraging" of a single company or institution will not have much impact on the market and economy. But if the whole market enters this process, most institutions and investors are forced or take the initiative to spit out the money borrowed by leverage in the past, then the impact is obviously extraordinary.
During the economic boom, the financial market was flooded with a large number of complex and highly leveraged investment tools. If most institutions and investors join the ranks of "deleveraging", these investment tools will be dissolved, the derivatives market will also shrink, and related industries will be hurt. With the sharp decrease of market liquidity, it will lead to economic recession.
Two stages
At present, the most common risk term in the world is "debt". Debt is actually an excessive overdraft of credit in essence. Abuse of credit will lead to debt risk and eventually lead to debt crisis. From the perspective of balance sheet, economic cycle fluctuation is often reflected in the adjustment process of leverage ratio of economic system. It usually goes through three deleveraging stages: early recession, private sector deleveraging, economic recovery and public sector deleveraging.
In the early stage of the recession, the private sector debt ratio climbed to a high point, and the public sector debt began to rise. This stage will last about 1-2 years; The second stage is the deleveraging stage of the private sector. The private sector's cash flow increased and the economy began to improve. However, due to the implementation of fiscal policy, the debt ratio of the public sector has reached a stage high. The duration of this stage is about 3-4 years; In the third stage, the public sector is deleveraging. Although the gross domestic product (GDP) rebounded and the debt ratio of the whole society rose again, the public sector had to start a long deleveraging process. This stage lasts about 10 years.
At present, the developed countries in the world are in the transition period from the second stage to the third stage. If we enter the third stage, it means that the era of cheap funds will soon be gone, and investors and borrowers will face the dilemma of rising borrowing costs. In the next few years, the superposition effect of credit crunch, fiscal crunch and consumption crunch will be further revealed.
Influence of each stage on China's economy
At each stage of deleveraging, China's economy is affected in different ways.
First of all, "deleveraging of financial products" has little impact on China. Due to the implementation of capital account control, most of China's foreign financial investment is in the form of central bank foreign exchange reserve investment. This kind of investment has always been cautious and conservative, and basically will not be involved in highly leveraged wealth management products. Even if there is a loss, it cannot be compared with the losses of other types of investors.
Secondly, "deleveraging of financial institutions" and "deleveraging of investors" have relatively little impact on China. On the one hand, China's banking industry is limited to the outside world, while the share of foreign financial institutions in the China market and their role in financial intermediaries are very small; On the other hand, due to the long-term balance of payments surplus, China's economy does not depend on external funds. In this way, when international financial institutions and investors deleverage, it will generally not have obvious negative effects on China. On this issue, the most serious impact on China's economy at present is that international commercial banks are also affected in the process of reducing their balance sheets.
Recently, the biggest negative impact on China's economy comes from "consumer deleveraging" in the United States and Europe. China's exports will be seriously threatened, which will lead to chain problems such as domestic overcapacity, weak manufacturing investment and unemployment of manufacturing workers.
In the medium and long term, China's economy is facing ...
Question 5: What is the significance of deleveraging? What is the function of deleveraging? "Lever" is the operation means of "amplifying" your "real money". For example, you only have 20 yuan, but if you use 20 yuan as a deposit, you can take part in 200 yuan's bet. Then this operation magnifies your money. You look like you have 200 yuan, but in fact you only have 20 yuan. Therefore, if you win, you will get high profits, and if you lose, it will be difficult to pay the expenses, resulting in a series of chain reactions. It can be seen that a highly leveraged market is very dangerous. De-leverage means: if you have 20 yuan, just bet on 20 yuan, and don't come to adults to join in the fun.
Question 6: stock market science: what is deleveraging? Simply put, it is to obtain high-yield "leverage" with less principal. This model was adopted by many enterprises and institutions before the outbreak of the financial crisis, especially investment banks, with a high degree of leverage.
"deleveraging" is a process in which a company or individual reduces the use of financial leverage. The trend of returning the original "borrowed" money by various means (or tools).
The reason for deleveraging is the objective demand put forward after the peak of the financial cycle, the spontaneous choice of banks and market players, and the power of market allocation.
When the profits of enterprises decline and they are unable to bear higher debts, they will choose to shrink their production capacity and repay their debts.
The rising bad debt rate of banks affects their performance and survival, and they will choose to collect more loans and lend less.
Question 7: What exactly does "deleveraging of China's economy" mean? De-foaming and de-debt.
Question 8: What is the paradox of deleveraging? Leverage is a way to help you make money by borrowing money from others. This is a high-risk investment strategy. If investors are conservative or can't bear the consequences of losses, it is better to use them as little as possible.
De-leveraging means that although there are still profits at present, the profits are getting smaller and smaller and the risks are getting bigger and bigger, so it is not feasible to use the leverage principle again!
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Question 9: What does deleveraging mean? Leverage refers to the phenomenon under the financial crisis. Simply put, leverage, with less principal to obtain high returns. This model was adopted by many enterprises and institutions before the outbreak of the financial crisis, especially investment banks, with a high degree of leverage.