We isolate the direct bank-to-sovereign distress channel within the Eurozone's sovereignbank-loop by exploiting the …-related variation. We find that the transmission of instrumented bank distress, while economically relevant, is significantly smaller … variables in previous studies. Furthermore, we show that the spillover of bank distress is significantly stronger for countries …

, complementary channel: bank risk taking. We model the portfolio choice of banks under moral hazard and thereby highlight the … reform which eliminates the debt bias discourages risk taking and reduces bank failure risk. Raising the corporate tax rate … that eliminates the debt bias in corporate taxation. Such a reform reduces bank leverage. This paper emphasizes a novel …

bank equity to determine credit reallocation, sectoral expansion and trade patterns. …

We use a compound option-based structural credit risk model to infer a term structure of banking crisis risk from … market data on bank stocks in daily frequency. Considering debt service payments with different maturities this term … structure assigns a separate estimator for short- and long-term default risk to each maturity. Applying the Duan (1994) maximum …