Stress tests have been increasingly used in recent years by regulators to foster confidence in the banking sector by … to better discriminate between banks. In this study, using an event study approach, we explore how market participants … performing banks in the stress test. Finally, we provide some evidence that also sovereign funding costs were affected in the …

How do banks respond to changes in capital requirements as a result of the stress tests? Does the disclosure of stress … test results matter? To answer these questions, we study the impact of European stress tests on banks' lending, their … the 2016 and 2018 exercises covering a total of 93 and 87 banks, respectively; and (ii) quarterly supervisory information …

the COVID-19 pandemic, we use the European bank stress test results as a natural experiment, in which all banks are … and empirically investigate, whether the conjunction of both effects constitutes a net benefit to banks' resilience …

Euro area governments have committed to break the doom loop between banks and sovereigns. But policymakers disagree on … reallocation by banks in response to regulatory reform. Simulations highlight a tension between concentration and credit risk in … opportunity set to include an area-wide low-risk asset. By reinvesting into such an asset, banks would reduce both their …

European banks. In this paper, we evaluate the possible effects of these constraints on risk and diversification in the … sovereign bond portfolios of the major European banks. First, we capture the dependence structure of European countries … analysis. We then analyse the risk and diversification in the sovereign bond portfolios of the largest European banks and …

This paper provides evidence on the strategic lending decisions made by banks facing a negative funding shock. Using … bank-firm level credit data, we show that banks reallocate credit within their loan portfolio in at least three different … ways. First, banks reallocate to sectors where they have a high market share. Second, they also reallocate to sectors in …

bank loans of the same maturity than non-issuer firms, suggesting an improvement in their bargaining power with banks. In …

Central Bank's release of stress test results for 130 significant banks on October 26, 2014. We document that following this …

We study the impact of increasingly negative central bank policy rates on banks' propensity to become undercapitalized … in a financial crisis ('SRisk'). We find that the risk impact of negative rates is moderate, and depends on banks …' business models: Banks with diversified income streams are perceived by the market as less risky, while banks that rely …