This paper examines the amplifying mechanism of systemic risk propagation within a nonlinear framework. We focus on the hidden leverage-induced asset value dynamics in the financial markets, intertwined with balance-sheet components of the banking system. We propose a systemic leverage index by estimating smooth transition regression models based on the intrinsic element of the financial system, off-balance-sheet transaction, and cross-border activities of the Korean commercial banking system. We find strong evidence that the amplification is more pronounced with the cross-sectional homogeneity in managing systemic leverage as a whole. This observation provides the important policy-oriented implication that an individual bank's systemic importance can be gauged by its marginal contribution to system- wide homogeneity.