conditions, credit default and bank capitalization for the transmission of macroeconomic shocks. We fit the model to euro area … empirical literature, i.e. the pro-cyclicality of bank profitability and the counter-cyclical response of firm default rates and …

in line with the economic conditions they face. Bank responses feed back to the macroeconomic environment affecting …

contract their balance sheets. These bank responses generate externalities that propagate in the form of macro … macro-financial feedback loops can significantly affect macroeconomic outcomes and bank-specific stress tests results. The … heterogeneity in bank lending responses matters: it determines how each bank fares under adverse conditions and the external effects …

This paper provides evidence on the strategic lending decisions made by banks facing a negative funding shock. Using … bank- rm level credit data, we show that banks reallocate credit within their domestic loan portfolio in at least three … the transmission of the funding shock to credit supply by 22, 8 and 10%,respectively …

results highlight the importance of the starting level of bank capital, bank asset quality, and banks' adjustments for the …

reallocates mostly towards safer producers. Lending standards propagate bank capital shortfalls through labor misallocation … increasing. Finally, with endogenous lending standards, first-moment bank capital shocks look like second-moment shocks. …