We show that financial sector bailouts and sovereign credit risk are intimately linked. A bailout benefits the economy …-financial sector to fund the bailout may be inefficient since it weakens its incentive to invest, decreasing growth. Instead, the … sovereign may choose to fund the bailout by diluting existing government bondholders, resulting in a deterioration of the …

repayments (default). Firms in Italy defaulted more against banks with high levels of past losses. We control for borrower … fundamentals with firm-quarter fixed effects; thus, identification comes from a firm's choice to default against one bank versus … bank relationships comes into doubt …

policy is non-targeted. The ex post benefits from a monetary bailout accrue in proportion to the number amount of leverage … bailout instruments is endogenous and characterize the structure of optimal bailouts …

monetary policy. The theory unifies an endogenous supply of illiquid local loans and risk-sharing among subsidiaries of bank …

We develop a new identification strategy to evaluate the impact of the geographic expansion of bank holding company … (BHC) assets across U.S. metropolitan statistical areas (MSAs) on BHC risk. We find that the geographic expansion of bank …

crucial year 1930. When the crisis worsened, state and local authorities began declaring bank holidays,' which limited the … right of depositors to make withdrawals, a movement that culminated in the declaration of a national bank holiday by …