Double Gearing

AAA

DEFINITION of 'Double Gearing'

Used to describe situations where multiple companies are using shared capital to buffer against risk occurring in separate entities without the proper documentation of exposure.

INVESTOPEDIA EXPLAINS 'Double Gearing'

Most common in financial sectors, one frequent example is insurance companies purchasing shares in banks as a reciprocal arrangement for loans. In these cases, both institutions are leveraging their exposure to risk.

RELATED TERMS
  1. Gearing

    The level of a company’s debt related to its equity capital, ...
  2. Bank

    A financial institution licensed as a receiver of deposits. There ...
  3. Leverage

    1. The use of various financial instruments or borrowed capital, ...
  4. Double Barreled

    A municipal general obligation bond in which the cash flows are ...
  5. Double Dipping

    For brokerage firms, when a broker puts commissioned products ...
  6. Premium to Surplus Ratio

    Net premiums written divided by policyholders’ surplus. The premium ...
Related Articles
  1. Investing Basics

    Stock Basics Tutorial

  2. Options & Futures

    Options Basics Tutorial

  3. Options & Futures

    Financial Concepts

  4. Options & Futures

    Investing 101: A Tutorial For Beginner ...

Hot Definitions
  1. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  2. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  3. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  4. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  5. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  6. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
Trading Center