Current Issues in Economics and Finance
What Financing Data Reveal about Dealer Leverage
March 2005 Volume 11, Number 3
JEL classification: G1, G2, E4

Authors: Tobias Adrian and Michael J. Fleming

The Federal Reserve collects data on the financing activities of the primary government securities dealers. Some market analysts argue that the data show a considerable rise in dealer leverage in recent years. However, a close reading of the data suggests that dealer borrowing involving fixed-income securities has grown only modestly. Moreover, the increase that has occurred is not clearly associated with greater risk taking.

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