Central banks focus on two objectives today: monetary and financial stability. Empirical evidence on this twin objective is scarce. We aim to contribute on the issue with an integrated micro-macro approach with two core virtues. First, we measure financial stability at the bank level for...

We test whether output growth in European economic agglomeration regions depends on financial development. To this end we suggest a relative measure of the quality of financial institutions rather than the usual quantity proxy of financial development. In order to measure the quality of...

Outright bank failures without prior indication of financial instability are very rare. Supervisory authorities monitor banks constantly. Thus, they usually obtain early warning signals that precede ultimate failure and, in fact, banks can be regarded as troubled to varying degrees before...

Cost and profit efficiency (CE and PE) are key to evaluate bank performance. But efficiency improvements may imply deteriorating profitability and excessive risk-taking. The dynamic reactions of performance in response to efficiency changes remain unclear on both theoretical and empirical...

We investigate the consistency of efficiency scores derived with two competing frontier methods in the financial economics literature: stochastic Frontier and Data Envelopment Analysis. We sample 34,192 observations for all German universal banks and analyze whether efficiency measures yield...

With this paper we seek to contribute to the literature on the relation between finance and growth. We argue that most studies in the field fail to measure the quality of financial intermediation but rather resort to using proxies on the size of financial systems. Moreover, cross-country...

German banks experienced a merger wave throughout the 1990's. However, the success of bank mergers remains a continuous matter of debate. In this paper we suggest a taxonomy as how to evaluate post-merger performance on the basis of cost efficiency (CE). We categorise mergers a success that...

In this paper we analyse bank efficiency in Germany for four cross-sections of data during the period 1995-2001. Under the assumption of cost minimisation we obtain firm-specific efficiency estimates using stochastic frontier analysis. To explicitly allow for different risk preferences when...

This paper investigates the role of corporate boards in bank loan contracting. We find that when corporate boards are more independent, both price and non-price loan terms - e.g., interest rates, collateral, covenants and performance pricing- are more favorable and syndicated loans comprise more...

Most bank merger studies do not control for hidden bailouts, which may lead to biased results. In this study we employ a unique data set of approximately 1000 mergers to analyze the determinants of bank mergers. We use undisclosed information on banks' regulatory intervention history to...