This study examines the heterogeneity of liquidity effect on leverage and the propensity of zero leverage. Using U.S. public firms from 1990 to 2021, we demonstrate that stock liquidity has significantly negative effects on total debt and secured debt while insignificant effects on unsecured debt. Firms with high stock liquidity reduce the portion of secured debt and increase unsecured debt amidst total leverage. The negative stock liquidity effect was alleviated following the 2007–2008 financial crisis (GFC) and was strengthened during the Covid-19 pandemic. We also provide the first evidence that stock liquidity increases the likelihood of zero leverage. Furthermore, we test potential economic channels and find that the liquidity effects on leverage are stronger for companies with more financial constraints and higher risk. Our results are robust to various measures of leverage and control for endogeneity. Overall, our results show that it is essential to consider the heterogeneity of corporate debt structure when analyzing the stock liquidity effect on leverage. Such effect varies significantly across different levels of debt security and the time periods around the GFC and the Covid health crisis.

This paper quantifies the Too-Systemic-To-Fail (TSTF) paradigm in the Eurozone since the introduction of the Euro through three primary dimensions: Too-Big-To-Fail (TBTF), Too-Interconnected-To-Fail (TITF), and Too-Many-To-Fail (TMTF). We apply prominent systemic risk measures based on public data, including the Granger-causality network (GCN), Delta Conditional Value-at-Risk (ΔCoVaR), Marginal Expected Shortfall (MES), and Systemic Risk Index (SRISK). Financial interconnectedness and systemic risk exposure within the 17-member states of the Eurozone are measured on two levels: (i) identifying which financial sectors (banking, diversified financials, insurance, and real estate) are most exposed to systemic risk in the Eurozone at the union level; and (ii) identifying which member state is most exposed to systemic risk within each financial sector at the country level. We extend the original ΔCoVaR, MES and SRISK models by incorporating the bootstrap Kolmogorov-Smirnov stochastic dominance test to rank institutions based on their exposure to systemic risk formally.

The Agadir Agreement has been reasonably successful, as it builds heavily on existing regional and bilateral initiatives since there is not a single Arab stock market, the main objective of this study is to examine the significance of stock markets integration among the four Agadir Agreement countries. Their interrelationships with five international markets, the United States, the European Economic and Monetary Union, the United Kingdom, Japan and the Gulf Cooperation Council countries are also examined. Testing the dependencies are studied using co-integration techniques: correlation matrix and variance decomposition for daily equity indices, returns and volatility between the Arab markets and other financial centers for the period from March 2002 till March 2012. The main conclusions of this empirical study show that the Agadir stock markets presented a moderate degree of integration before Agadir Agreement. Therefore, the negative correlation and returns among the Agadir member states after Agadir Agreement is mainly due to the global financial crisis as the negative correlation is higher between the Agadir members and other exchanges.