This paper examines common regulation as cause of interbank contagion. Studies based on the correlation of bank assets … that banks have a common regulator. In our model, the failure of one bank can undermine the public's confidence in the … forbearance to the initially failing bank in the hope that it - and hence other vulnerable banks - survives. By contrast, public …

gambling for resurrection, the risk-taking is driven by large and less profitable banks. The net impact on bank probabilities …

' tightening on bank probabilities of default is positive albeit statistically insignificant, suggesting that risk-taking may crowd …

-deposit creditors. Testing the model using EU bank level data yields evidence consistent with the model, suggesting that explicit …

framework were more likely to require public support during the crisis. We instrument some characteristics of bank balance … sheets with these prudential indicators to investigate how they affect bank resilience. The share of non-interest income …

experiment to examine the effect of government guarantees on bank risk taking, using a large data set of matched bank …

shock caused by a large-bank failure in conjunction with detailed data on interbank exposures. First, we find robust … evidence that higher interbank exposure to the failed bank leads to large deposit withdrawals. Second, the magnitude of …

of bank failures. We find that risk-adjusted premiums reduce moral hazard, enabling the policymaker to increase deposit … insurance coverage by 3 percentage points and decrease the share of expected annual bank failures from 0.66% to 0.16%. The model …

This paper examines common regulation as cause of interbank contagion. Studies based on the correlation of bank assets … that banks have a common regulator. In our model, the failure of one bank can undermine the public’s confidence in the … forbearance to the initially failing bank in the hope that it - and hence other vulnerable banks - survives. By contrast, public …