• ISSN: 2301-3567 (Print), 2972-3981 (Online)
    • Abbreviated Title: J. Econ. Bus. Manag.
    • Frequency: Quarterly
    • DOI: 10.18178/JOEBM
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    • Executive Editor: Ms. Fiona Chu
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HOME > Archive > 2026 > Volume 14 Number 3 (2026) >
JOEBM 2026 Vol.14(3): 204-206
DOI: 10.18178/joebm.2026.14.3.939

Effectively Reducing Financial Crisis Risks Caused by Leverage Games: Theory, Empirical Evidence, and Policy Research

Yilin Zhang
Yilin Zhang
FST, BNBU, Zhuhai, China
Email: 3167239184@qq.com

Manuscript received May 2, 2026; accepted August 4, 2026; published September 9, 2026.

Abstract—Since the 2008 global financial crisis, the rapid rise in leverage ratios and the accumulation of risk have become central issues in the economic and financial sectors of many countries. Historical experience shows that high-leverage operations played key roles in the 1929 Great Depression, the 1997 Asian financial crisis, and the 2008 subprime mortgage crisis. In recent years, although China’s macro leverage ratio has stabilized, structural problems such as corporate sector debt and local government implicit debt remain prominent. This paper focuses on the leverage game’s impact on financial crises and explores effective policy measures to mitigate the associated risks. Using literature review, comparative analysis, empirical testing, and case study methods, this study examines how leverage triggers financial crises through asset price fluctuations, credit crunch, and liquidity depletion. Empirical results confirm that excessive leverage growth rates and irrational structures are critical factors in financial vulnerability. The research finds that “stable leverage” and “structural deleveraging” are more optimal strategies than simple deleveraging policies. Macro-prudential policies play essential roles in preventing systemic risks, but their effectiveness depends on policy coordination and precision. Additionally, behavioral financial factors significantly amplify leverage risks, requiring policy designs that account for market participants’ irrational behavior. This study provides theoretical and practical references for constructing effective leverage risk prevention systems to maintain financial stability and sustainable economic development.
 
Keywords—leverage game, financial crisis, systemic risk, macro-prudential policy, structural deleveraging

Cite: Yilin Zhang, "Effectively Reducing Financial Crisis Risks Caused by Leverage Games: Theory, Empirical Evidence, and Policy Research," Journal of Economics, Business and Management, vol. 14, no. 3, pp. 204-206, 2026.

Copyright © 2026 by the authors. This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited (CC BY 4.0).


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