We integrate bank and bond financing into a two-sector neoclassical growth model to examine the stabilization effect of … endogenous bank leverage adjustment. We show that although bank leverage amplifies shocks, the increase of leverage to a decline … in bank equity is an automatic stabilizer in downturns, since it partially offsets the decline of bank lending to …

. For an international sample of banks, this paper investigates the impact of government indebtedness and deficits on bank … stock prices and credit default swap spreads. Overall, bank stock prices reflect a negative capitalization of government … reduction in their market valuation in countries running large fiscal deficits. Furthermore, the change in bank credit default …

The financial crisis that began in 2007 in the United States swept the world, producing substantial bank failures and …

. For an international sample of banks, this paper investigates the impact of government indebtedness and deficits on bank … stock prices and credit default swap spreads. Overall, bank stock prices reflect a negative capitalization of government … reduction in their market valuation in countries running large fiscal deficits. Furthermore, the change in bank credit default …