掌握财务杠杆的风险和回报

This report was commissioned by the Managed Funds Association as a primer to help policymakers,the media, and the broader public understand the role of leverage in the financialsystem. Oliver Wyman shall not have any liability to any third party in respect of this report or any actions takenor decisions made as a consequence of the results, advice or recommendations set forth herein. This report does not represent investment advice or provide an opinion regarding the fairness ofany transaction to any and all parties. This report does not represent legal advice, which can only beprovided by legal counsel and for which you should seek advice of counsel. The opinions expressedherein are valid only for the purpose stated herein and as of the date hereof. Information furnished byothers, upon which all or portions of this report are based, is believed to be reliable but has not been Introduction The risks associated with leverage in the financial system are currently receiving a great deal ofattention. Leverage does bring risks, but the coverage sometimes loses sight of the benefits ofappropriate uses of leverage. In fact, financial leverage is essential to our financial system andwider economy. For example, banking systems in the US and globally are built around a model Financial leverage allows a level of investment by businesses and households well beyond whatwould otherwise be possible. For example, relatively few homeowners would have been ableto afford their homes without a mortgage. Leverage also enables borrowers to undertake a The key is to balance the advantages and disadvantages of financial leverage. Sound riskmanagement practices exist to manage the downsides while preserving as much as possibleof the benefits. When followed, they normally hold risks down to a level that borrowers can This primer explains the basics of financial leverage and how it is used in the United States. Theprimary focus is on its use for investment purposes. We organize the explanation around the •What is financialleverage?•How is it used?•What are the benefits for users ofleverage?•What are the risks for users of leverage?•How do users mitigate the risks?•How is leverage provided other than through loans?•Who are the main providers of leverage?•Who are the main users? What is financialleverage? In its classic form, financial leverage involves borrowing funds to pay for part of an investment,such as taking out a mortgage to pay for the bulk of a house purchase. The term “leverage”is used as a metaphor for the physical world, where a lever can multiply a person’s efforts to There are also more sophisticated ways of obtaining financial leverage that do not directly Assume a home buyer puts up $20,000 as a downpayment on a $100,000 house and borrowsthe other $80,000. If the buyer later sells the house for $120,000, a gain of $20,000, he or shewould have doubled their own investment after repaying the mortgage, by walking away with$40,000. Thus, a 20% gain in the price of the underlying investment translates into a 100% How is itused? Financial leverage is used in multiple ways. It can help purchase a physical asset, such as ahouse or a factory. It can also be used for financial investments, such as by purchasing stocks What are the benefits for users ofleverage? There are three broad benefits of leverage. First, it can enable an investor to buy a larger assetthan they would otherwise be able to do. This benefit is particularly important in circumstanceswhere an asset must be purchased in whole and not part, such as a house or a data center.Second, it can substantially increase the potential gain from an investment. Third, as a What are the benefits forsociety? Society benefits in multiple ways from the use of financial leverage, which is a key element ofthe financial system. First, leverage amplifies the volume of investments that can be made.Importantly, the leverage provided through mortgages is essential to the ability of mosthomeowners to buy the houses in which they live. Businesses also use leverage to expand their Second, these activities open up investment opportunities for the providers of leverage. There isa strong societal demand for safe short-term assets which exceeds the natural supply of thoseinvestments absent the use of leverage. Banks play a major role as deposit takers in virtuallyall countries, providing a safe, highly-liquid asset for households and businesses. This asset for Third, some types of socially useful investment activities would not be undertaken withoutthe return enhancement provided by leverage. Many of these are arbitrage transactions thathelp keep prices across the financial sector efficient. This promotes economic efficiency by What are the risks for users ofleverage? There are four main risks for users of leverage. First, any decline in the value of the underlyinginvestment will amplify the investor’s losses, potentially even creating a loss of more thanthe initial inve