Score contribution per author:
α: calibrated so average coauthorship-adjusted count equals average raw count
We propose a regulatory approach for restricting debt financing as an amplification mechanism across the financial system. A stylised model illustrates the trade-off between static and time-varying limits on leverage in dampening the financial cycle. Whereas the traditional view on regulation focuses on equity capital as a buffer against exogenous risks, our approach focuses instead on debt financing and endogenous feedback mechanisms.