regulation on the probability of a crisis. We test this relationship by applying a Probit model of a non-linear specification to …: it rises as regulation stringency moves from low to medium levels and falls from medium to high levels. Countries located …

ratio) and size (TBA) of the industry are linked to lower sovereign risk in general. Foreign bank penetration and …We analyze the link between banking sector quality and sovereign risk in the whole European Union over 1999–2014. We … employ four different indicators of sovereign risk (including market- and opinion-based assessments), a rich set of …

We explore how changes in capital-based macroprudential regulation in the euro area affect the exposure of national … banking sectors to domestic government debt, thus strengthening or weakening the sovereign-bank nexus. To do so, we construct … banks' exposure to domestic sovereign bonds in the periphery countries and thus deepens the sovereign-bank nexus. By …

imply that an individual bank failure in one country could trigger negative spillover effects in another country. Such cross … from a supranational perspective. In consequence, the probability of a bank failure will be inefficiently high. Against the …

in macroprudential capital regulation. Our findings suggest a dichotomy between country groups. In peripheral countries … after the innovation might pose a threat to financial stability to the extent that sovereign risk increases. By contrast, in … core countries, the cyclically adjusted primary balance ratio barely reacts to a sudden tightening in capital regulation. …

Banking regulation invites banks to gamble when buying government bonds that regulators consider to be risk-free. The … regulation in order to enhance their fiscal leeway. We examine an unintended side-effect of banking regulation, namely the zero-risk …. By contrast, the EU would benefit from more risk-based macroprudential regulation and a more credible constitutional no …

We model EU countries' bank ratings using financial variables and allowing for intercept and slope heterogeneity. Our … differences in financial factors, which may reflect differences in country risk and the legal and regulatory framework that banks … face (such as foreclosure laws). In addition, we find that ratings may respond differently to the liquidity and operating …

', if fiscal consolidation is combined with a program for bank recovery and for competitiveness and growth. The second …

We develop a stylized DSGE model in which banks face capital regulation and their loan portfolios are subject to non … conditions, credit default and bank capitalization for the transmission of macroeconomic shocks. We fit the model to euro area … empirical literature, i.e. the pro-cyclicality of bank profitability and the counter-cyclical response of firm default rates and …