During the financial crisis banks faced liquidity shocks, and lending slowed down. The reduction in credit availability … needs; on the other hand, the tightening of credit supply was the result of banks� greater risk-aversion, difficulties in … raising funds, and a worsening in the creditworthiness of borrowers. However, banks do not pass on liquidity shocks to …

the fiscal regime when the signaling effect on credit ratings is larger (that is, when a sufficiently large stock of debt … governments. We show that a testable prediction of our model is that primary balances and debt stocks are complementary inputs in … the credit rating function and we successfully test it on Irish, Belgian, and Danish data from the late 1970s to the early …

of data on banks’ balance sheets, central banks and money market funds; on interest rates on deposits and loans; on non …