. In normal recessions, firm and bank net worth play the same role, so their sum determines the allocation of capital …. During financial crises, shocks to bank net worth have an additional effect beyond that in standard financial frictions … bank net worth during the Great Recession. Finally, the model is consistent with the different dynamics of the share of …

Through the compulsory participation of junior investors in bearing losses of their failing bank, the bailin attempts … to limit bail-outs' side-effects in terms of market discipline, too-big-to-fail, bank-sovereign nexus and risk …-in effects on bank resilience appear mixed. While it incentivises banks to reduce risk-taking (e.g., increasing risk …