firms. We show that banks' exposures to impaired sovereign debt and the risk-shifting behavior of undercapitalized banks … contraction of banks affected by the crisis depressed the investment, job creation, and sales growth of firms affliated with these … banks. Our estimates suggest that the credit crunch explains between one-fifth and one-half of the overall negative real …

Over the past two decades, banks have increasingly focused on offering contingent credit in the form of credit lines as … a primary means of corporate borrowing. We review the existing body of research regarding the rationales for banks … repay credit lines are put options issued by banks, which are exercised by firms in a correlated manner during periods of …

Using a comprehensive dataset from German banks, we document the usage of sovereign credit default swaps (CDS) during … the European sovereign debt crisis of 2008-2013. Banks used the sovereign CDS market to extend, rather than hedge, their … protection selling in CDS, the effect being weaker when sovereign risk is high. Bank and country risk variables are mostly not …

channel, one bank's capital policy affects the equity value and risk of default of other banks. In a model where such … externalities are strong, bank capital takes on the attribute of a public good, where the private equilibrium features excessive … implications of the model with observed bank behavior during the crisis of 2007-09 …

Since the summer of 2007, the financial system has faced two major systemic crises. European banks have been at the … banks across both crises exploiting the specific institutional nature of the European banking system. We employ the … institutions based on their individual contribution to the capital shortfall of the financial system. We analyze what banks are …

We provide evidence consistent with a “credit-line drawdown channel” to explain the large and persistent crash of bank … stock prices during the COVID-19 pandemic. Stock prices of banks with large ex-ante exposures to undrawn credit lines and … large ex-post gross drawdowns declined more, especially of banks with weaker capital buffers. These banks reduced new …

Using a comprehensive dataset from German banks, we document the usage of sovereign credit default swaps (CDS) during … the European sovereign debt crisis of 2008-2013. Banks used the sovereign CDS market to extend, rather than hedge, their … protection selling in CDS, the effect being weaker when sovereign risk is high. Bank and country risk variables are mostly not …

In recent years, assets of non-bank financial intermediaries (NBFIs) have grown significantly relative to those of … banks. These two sectors are commonly viewed either as operating in parallel, performing different activities, or as … substitutes, performing substantially similar activities, with banks inside and NBFIs outside the perimeter of banking regulation …

rewards managers for pursuing risky strategies but fails to exact penalties for decision making that leads to bank failures …