from bank defaults across the member countries. At the same time, however, the banking union will resort to bank bailouts … more often, distorting risk incentives of banks. For low bank liquidation costs, the net welfare effect of a banking union … the joint bailout costs. In equilibrium, all countries are less willing to join a banking union which induces moral hazard. …

bank loans, we also estimate the future outflows of TFR funds due to the reform. …

systemic banks. First, a Distance-to-Default type measure relates a bank's default risk to its capital requirements. Second, a …