‘Significant non-linearities’ in debt-investment relationship, paper says

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A working paper published by the European Central Bank takes an empirical approach to calculating leverage levels among eurozone firms and seeing how these affect investment.

In Corporate debt and investment: a firm level analysis for stressed euro area countries, Stefan Gebauer, Ralph Setzer and Andreas Westphal look at firm-level data from five peripheral European Union countries from 2005 to 2014.

Previous research has found “evidence that high debt distorts investment due to higher default

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