Outright bank failures without prior indication of financial instability are very rare. Supervisory authorities monitor … regarded as troubled to varying degrees before outright closure. But to our knowledge virtually all studies that predict bank … failures neglect the ordinal nature of bank distress. Exploiting the distress database of the Deutsche Bundesbank we …

a large, unbalanced panel of German banks including 32,023 bank-year observations. We see an increase in the use of GBR …