Abstract
Leverage, or gearing, was originally a term describing the use of ownership as a basis for borrowing. In addition, the term refers to the pyramiding of debt so that earnings (but also losses) increase in greater proportion than those based on equity alone. Shakespeare’s Polonius advised his son: “Neither a borrower nor a lender be,” let alone a leveraged borrower or lender to geared people and companies.
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Notes
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© 2009 Dimitris N. Chorafas
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Chorafas, D.N. (2009). Leverage Can Be Highly Counterproductive. In: Capitalism Without Capital. Palgrave Macmillan Studies in Banking and Financial Institutions. Palgrave Macmillan, London. https://doi.org/10.1057/9780230251021_5
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DOI: https://doi.org/10.1057/9780230251021_5
Publisher Name: Palgrave Macmillan, London
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