issuing defaultable bonds even when underlying firm fundamentals remain unchanged. Hedging (Speculating on) credit risk lowers …

self-fulfilling beliefs as drivers of sovereign default risk. I show how default risk can be decomposed in a solvency-risk … component and a coordination-risk component. I then study how fiscal policy can be effective in managing the risk of … coordination and I characterise how the shape of the optimal policy is affected by the presence of this risk: making the deficit …

the default-risk premium the default anomaly disappears. In contrast, controlling for credit spreads does not fully … controls for default risk via the default-risk premia …

. This evidence is consistent with the notion that the use of covenants reduces bankruptcy risk. However, theory suggests … management's actions. We disentangle these two relations between covenant use and bankruptcy risk by considering predicted and …-issue cost relation is mainly driven by the risk to underwriters. Overall, these results both confirm some essential aspects of …

. This evidence is consistent with the notion that the use of covenants reduces bankruptcy risk. However, theory suggests … management's actions. We disentangle these two relations between covenant use and bankruptcy risk by considering predicted and …-issue cost relation is mainly driven by the risk to underwriters. Overall, these results both confirm some essential aspects of …

long time. -- liquidity trap ; financial crisis ; rare disasters ; equity capital ; leverage ; bankruptcy risk …This paper explains the emergence of liquidity traps in the aftermath of large-scale financial crises, as happened in … equity capital to the risk-free interest rate. When equity capital falls, bankruptcy risks rise. Firms become more vulnerable …