We study the effect of weakening creditor rights on distress risk premia via a bankruptcy reform that shifts bargaining power in financial distress toward shareholders. We find that the reform reduces risk factor loadings and returns of distressed stocks. The effect is stronger for firms with...

In this paper we examine the role of syndicated loan markets in financial market development in 24 European countries. We find credit spreads to be negatively related to market size in small markets and positively related in large financial markets. Syndicated loans play a different role in...

This paper provides a theoretical model that explains the empirical observation that foreign banks from industrialized countries tend to increase their involvement in emerging markets during periods characterized by instabilities. In this model, domestic banks have more 'soft' information about...

The paper explores how legal change affects lending behavior of banks in twelve transition economies of Central and Eastern Europe. In contrast to previous studies, we use bank level rather than aggregate data, which allows us to control for country level heterogeneity and analyze the effect of...

This paper explores how the legal environment affects bank behavior in 20 transition economies. Based on a newly constructed data set we find that banks' loan portfolio composition depends on the legal environment. If banks operate in a well-functioning legal environment they lend relatively...

In this paper we examine risk taking and risk management with the help of a new survey data set from EBRD. We do so in this paper with the familiar balance sheet and income data prepared by Bank Scope and also with information from the EBRD's 2005 survey of bank managers. We find no indication...

In this paper we examine changes on investment decisions induced by the introduction of the Euro. There are two potential sources of portfolio reallocation. First, exchange rate risk diminished within the EMU region. Second, monetary policy has been bundled within one institution. We test for...

This paper examines the strategies of foreign banks in transition economies. An extreme high share of foreign banks characterizes theses banking markets. I outline different strategies of foreign banks, model their entry decision and provide an empirical analysis by estimating loan supply...

Entering the EMU removes currency risk for assets originating in the Euro area while diversification opportunities are likely reduced. Taking the perspective of an investor in one of the 12 countries that joined the EU in 2004/2007 we contrast actual optimal composition of international equity...

This paper explores how the legal environment affects bank behavior in 20 transition economies. Based on a newly constructed data set we find that banks loan portfolio composition depends on the legal environment. If banks operate in a well-functioning legal environment they lend relatively more...