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 beenverified. No warranty is given as to the accuracy of such information. Public information and industryand statistical data are from sources Oliver Wyman deems to be reliable; however, Oliver Wymanmakes no representation as to the accuracy or completeness of such information and has accepted theinformation without further verification. No responsibility is taken for changes in market conditionsor laws or regulations and no obligation is assumed to revise this report to reflect changes, events orconditions, which occur subsequent to the date hereof. 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 modelof taking deposits (a form of debt) to support loan volumes that are much bigger than would bepossible using only the equity provided by the shareholders of those banks. 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 arange of activities that would be infeasible without leverage. However, it also brings risks bymultiplying the impact of losses on the underlying investments and it generally comes withinterest charges or other running costs that must be met before any profit isachieved. 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 canhandle, without eliminating the inherent nature of leverage, which magnifies both potentialgains and losses. 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 thefollowing high-level questions. •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 are the archetypes of leverage provision?•What are the benefits forsociety?•What are the risks?•How are these risks managed?•How is the use of leverage regulated? 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 tomove a considerably larger object than would otherwise be possible. Financial leverage similarlymultiplies the potential gain or loss on an investment. There are also more sophisticated ways of obtaining financial leverage that do not directlyinvolve borrowing, as described later. 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%return on the homebuyer’s money. Of course, selling the house for $80,000 instead wouldtranslate the 20% loss on the home’s value to a 100% loss on the homebuyer’s money, leavingnothing left for the buyer. For simplicity, we will generally ignore transaction costs and interestexpense in our examples, except where they are important to making a particular point. How is itused? Financial leverage is used in multiple ways. It can help purchase