We show by means of a bank relationship model that after monetary policy tightening, public firms (having easier access to public capital markets) are more likely to decrease their demand for bank loans than private firms (which are typically more dependent on bank credit and benefit more from...

This paper contributes to the empirical evidence on the credit channel of monetary policy in the euro area by providing firm level evidence on the relation between the impact of monetary policy on firm balance sheets and the corporate governance characteristics of the firms. A sample of half a...

Models which integrate various financial stability risks are still in an early stage of development. In this paper we use the Macrofinancial Risk model (MfRisk) to construct a measure for financial stability. MfRisk applies the Merton option model in a multi-sector framework. We argue that this...

In this paper we investigate how expected liquidation costs affect a firm's investment and financing decisions. We hypothesise that comovement of firm and industry sales measures such costs, which create a premium on external finance and make investment more sensitive to the availability of...

This paper argues that a special bank bankruptcy regime is desirable for the efficient restructuring and/or liquidation of distressed banks. We first explore the principal features of corporate bankruptcy law. Next, we examine the specific characteristics that distinguish banks from other...

We investigate whether banks use of loan loss provisions (LLPs) to manage the level and volatility of their earnings and examine the implications for bank risk. We find that banks use LLPs to manage the level and volatility of earnings downward when they are abnormally high and when expected...

An empirical investigation of the relationship between market share or concentration and return on equity or assets provides evidence for the existence of a profit-structure relationship in the European banking sector. Testing several market-power and efficient-structure theories reveals that...

This paper provides a survey on recent developments in the European banking industry. Traditional banking activities have contracted in relative terms, but banks remain the predomination players in the euro area financial system. Economic and monetary integration in the EU has strongly...

This paper reviews the empirical literature on the corporate governance of banks. We start by highlighting the main differences between banks and non-financial firms and focus on three characteristics which make banks special: (i) regulation, (ii) the capital structure of banks, and (iii) the...