decline. While participating contracts embedding these guarantees are designed to share market risk across investor cohorts … when guarantees are not binding, we study how binding guarantees distort inter-cohort risk sharing. Using regulatory data …

decline. While participating contracts embedding these guarantees are designed to share market risk across investor cohorts … when guarantees are not binding, we study how binding guarantees distort inter-cohort risk sharing. Using regulatory data …

and government deficits. The financial intermediaries face the risk of a (partial) default of the government on its debt …, significantly increasing output losses and declines in investment after a financial crisis. We introduce sovereign default risk … between sovereign default risk and financial fragility emerges. A debt-financed recapitalisation of the financial …