Theoretically, bank's loan monitoring activity hinges critically on its capitalisation. To proxy for monitoring … governance of the firm. Exploiting granular bank-firm relationships observed in the syndicated loan market, we document … tightening of credit terms when firms experience shocks. …

increases with the lead bank's incentives and the value of information and is negatively associated with loan spreads and … financial condition and credit line drawdowns. Finally, monitoring is positively related to future covenant violations and loan …

Loan guarantees represent a form of government intervention to support bank lending. However, their use raises concerns … as to their effect on bank risk-taking incentives. In a model of financial fragility that incorporates bank capital and a … bank incentive problem, we show that loan guarantees reduce depositor runs and improve bank underwriting standards, except …

combine a credit risk stress test which simulates credit impairments via a CreditMetrics type multi-factor portfolio model … stress, while more than 6% of our sample's credit banks "fail" the stress test, mainly due to their lack of capital. The main … stress drivers prove to be credit impairments rather than other net income components. …

in line with the economic conditions they face. Bank responses feed back to the macroeconomic environment affecting … credit supply conditions. When applied to a stress test of the euro area banking system, the model reveals higher system …

IFRS 9 substantially affects the financial sector by changing the impairment methodology for credit losses. This paper … analyzes the implications of the change from IAS 39 to IFRS 9 in the context of bank resilience. We shed light on two effects …. First, the "cliff-effect", which refers to sudden increases in impairments. It occurred under IAS 39, as credit losses were …