This week's plunge in stocks and the prices of risky debt raises the possibility that investors, who had been displaying an unusual appetite for risk, are becoming risk-averse. Such a development could have big consequences for the U.S. and world economies.

In recent years, investors have poured money into risky investments from subprime mortgages and emerging-market debt to Chinese stocks. In the process, they have accepted ever-narrower returns, or "risk premiums." That has helped distressed companies avoid bankruptcy, financed a record leveraged-buyout spree, fueled surging profits on Wall Street, enabled poor countries to finance domestic spending and even made insurance easier for consumers to obtain.

Recent events, primarily Tuesday's plunge in Chinese stocks and a continuing collapse in the demand for subprime mortgages in the U.S. , suggest that could be changing. "If you see a widespread change in investor risk appetites, it does make a big difference for the economy," said Stephen Stanley, chief economist for RBS Greenwich Capital. "It becomes more expensive for businesses and households to get money."

So far, the reversal has been tiny and may prove to be a hiccup. Federal Reserve Chairman Ben Bernanke told Congress yesterday: "There is really no material change in our expectations for the U.S. economy." The Dow finished the day ahead 52.39 points. (See related article on page C1.)

Yet some economists see a turning point. "This is a wake-up call," said John Lonski, chief economist at Moody's Investors Service. "Unfortunately, if there is an increase in risk aversion, it's taking place exactly when business-investment spending has been much lower than anticipated."

One of the first places this is showing up is in the market for subprime mortgage loans, those made to less-creditworthy borrowers. As defaults on such loans have risen sharply, investment banks and other financial firms have sharply reduced the creation of new collateralized debt obligations backed by subprime loans. Such CDOs have become a popular way to pool baskets of loans, then redistribute slices with varying degrees of risk and return to a spectrum of investors.

"It affects everyone up the chain," said Greg Miller, a portfolio manager at hedge fund Saye Capital, which is active in the subprime market. "It's certainly harder to get a loan today than it was a month or two months ago for certain borrowers." Still, he said the lenders' pullback is likely to affect only a small slice of homeowners.

Corporate debt may feel the pain, too. As the gap between corporate bonds, including those with junk-rated status, and those of safe Treasury bills has fallen to near-record lows, global issuance of junk-rated bonds rose to $354 billion last year from $145 billion in 2002, according to Dealogic.

Money also has poured into exotic forms of corporate debt such as credit default swaps and collateralized debt obligations. Among other things, that money helped fuel a surge in U.S. leveraged-buyout deals to $418 billion in 2006, more than triple the level of 2005. The total this year is $84 billion, according to data provider Thomson Financial.

Louise Purtle, a strategist at research firm CreditSights, said waning investor risk appetites will make it more difficult for buyout firms and companies of all kinds to borrow money.

"All of the LBO deals, particularly the big deals, have been highly dependent on the excessive level of risk appetite," she said, in particular this week's proposed private-equity takeover of Texas utility TXU Corp. Less appetite for risk could mean constraints in how much new equipment such companies can buy and how many new employees they can hire.

Another ripple could be felt on companies carrying large debt loads or in distress. Such companies have found it easier to obtain new financing in recent years. More recently, the percentage of companies that renege on their debts has held at extremely low levels, despite predictions that it will rise eventually. According to Standard & Poor's, the corporate-default rate stood at only 1.4% at the end of January, below the 25-year average of 4.5%.

Many companies, though, have managed to avoid trouble largely because investors have been so willing to make fresh loans. "Investors' willingness to take on risk has allowed a lot of companies to stay afloat that would otherwise not have stayed afloat," said Ray Kennedy, a high-yield-portfolio manager at Pacific Investment Management Co. in Newport Beach , Calif.

Charter Communications Inc., one of the nation's largest cable companies, managed to get billions of dollars in new financing last year despite that it was losing money and was saddled with massive debts. "That has allowed it to buy itself time while it improves its operations," said Mr. Kennedy. "If that were 2002, they never would have been able to get that financing."

In the fall of 2005, money manager ForstmannLeff was plunged into crisis when its controlling shareholder, Refco Inc. Chief Executive Phillip Bennett, was arrested. Investors began to pull money out of the firm. Investment banker Miller Mathis & Co. talked to other money managers about investing in the company, but they weren't interested, and lenders were offering only short-term financing. Instead, Angelo Gordon & Co., a $10 billion alternative-investment manager specializing in distressed debt, decided to make an equity investment, buying control of the company and preserving its 125 jobs.

When a company is in financial straits, "the conventional sources of capital are not as interested in taking the risks," said Sean Mathis, managing director at Miller Mathis. The willingness of alternative investors to make risky investments has helped keep companies out of bankruptcy protection. "This definitely could change with greater risk aversion, and more defaults will lead to greater aversion."

Other beneficiaries of investors' appetite for risk have been emerging-market countries, which raised $319 billion on global bond markets last year, compared with $122 billion in 2002. NWI Management LP, a hedge fund specializing in emerging-market debt, has seen its assets triple since 2002 to about $5 billion. Chief Executive Hari Hariharan said the shrinking risk premiums are "well deserved." Yields on Brazilian three-year local-currency bonds, for instance, have fallen to 12% from 19% in the past few years because the central bank has reduced inflation to 4% from 5%.

Still, Raghuram Rajan, former chief International Monetary Fund economist, said many countries had begun to loosen their budgets thanks to the ease of borrowing from abroad. A rise in investor risk aversion could force a return to austerity. "The question," he said, "is at what pace will it force change?"

Many economists argue the recent decline in risk premiums reflects fundamental changes in the economy. That, they said, should limit the extent of any reversal, limiting the impact on the broad economy. Fluctuations in economic activity have become much less pronounced in the past few decades, one reason corporate defaults have decreased.

There also is the possibility that the decline in risk premiums was self-reinforcing, and so a reversal might be, as well. Before Tuesday, the price volatility of stocks, bonds and even currencies had fallen to unprecedented low levels. The lack of volatility, in turn, drastically reduces sophisticated investors' estimates of how much money they could lose on any given day. As a result, those investors -- largely banks and hedge funds -- often feel comfortable taking on still more risk by using borrowed money.

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