Böhm, Hannes; Eichler, Stefan - 2019 - This Version: January 2019
We isolate the direct bank-to-sovereign distress channel within the Eurozone’s sovereignbank-loop by exploiting the … global, non-Eurozone related variation in stock prices. We instrument banking sector stock returns in the Eurozone with …-related variation. We find that the transmission of instrumented bank distress, while economically relevant, is significantly smaller …