We analyse the poisonous interaction between bank rescues, financial fragility and sovereign debt discounts. In our … sovereign debt discount. We introduce long term government debt, which gives rise to the possibility of capital losses on bank … intermediaries causes bond prices to drop triggering capital losses at the bank under intervention. This mechanism shows the limits …

This paper studies the role of a lender of last resort (LLR) in a monetary model where a shortage of bank’s monetary …

financial institutions, especially for institutions with high leverage. This study uses Extreme Value Theory to estimate the …

Diamond-Dybvig model cast in a global games framework, we show that while the CoCo conversion of the issuing bank may bring … the bank back into compliance with capital requirements, it will nevertheless raise the probability of the bank being run …