Double Gearing

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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.

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