Term:
Double leveraging of capital
Definition:
Situations where related entities share capital. For example, if a deposit-taker owns equity in another deposit-taker in the group, capital is said to be double leveraged because both entities are resting activity on the same pool of capital. When capital is double leveraged, the capital actually available to the group to meet unanticipated losses is less than the data implies.
Domain:
Finance
Source:
IMF, 2004, Compilation Guide on Financial Soundness Indicators, IMF, Washington DC, Appendix VII, Glossary