Leverage, Risk, and Return in Europe: An Analysis of the Last 20 Years

Years of low rates and ultra-accommodative monetary policy have made debt a cheap and easy-to-refinance source of capital. In Europe this came in the form of unconventional monetary policy tools used by the European Central Bank (ECB) in its attempt to fight economic crises and fulfill its mandate of price stability across the monetary union. However, inflation has never really been impacted, despite the huge efforts of the ECB, and we saw negative yields to maturity for the first time ever.