We show that financial sector bailouts and sovereign credit risk are intimately linked. A bailout benefits the economy …-financial sector to fund the bailout may be inefficient since it weakens its incentive to invest, decreasing growth. Instead, the … sovereign may choose to fund the bailout by diluting existing government bondholders, resulting in a deterioration of the …

repayments (default). Firms in Italy defaulted more against banks with high levels of past losses. We control for borrower … fundamentals with firm-quarter fixed effects; thus, identification comes from a firm's choice to default against one bank versus … bank relationships comes into doubt …

failure of one bank may lead to others. Earlier work had suggested that, provided shocks were not too large (or too correlated …

international credit markets: bailout guarantees and the imperfect enforceability of contracts. The interaction of these distortions …

We examine banking regulation in a macroeconomic model of bank runs. We construct a general equilibrium model where …

-sector-time panels to assess how different funding structures are related to financial stress. A higher share of funding from non-bank …

macroprudential tax revenue in a bailout fund used for stimulus measures is undesirable …

policy is non-targeted. The ex post benefits from a monetary bailout accrue in proportion to the number amount of leverage … bailout instruments is endogenous and characterize the structure of optimal bailouts …