The small decline in the value of mortgage-related assets relative to the large total losses associated with the financial crisis suggests the presence of financial amplification mechanisms, which allow relatively small shocks to propagate through the financial system. We review the literature...

Recent developments in Ireland, Greece, and Spain have shown that sovereign debt crises endanger the solvency of domestic banking sectors, while banking crises in turn endanger the solvency of the domestic sovereigns. This diabolic loop between government and bank solvency is exacerbated by the...

Jüngste Entwicklungen in Irland, Griechenland und Spanien zeigen: Finanzierungskrisen von Staaten gefährden deren Bankensektoren, Bankenkrisen die Zahlungsfähigkeit ihrer Heimatstaaten. Diese Kopplung von Staats- und Bankensolvenz wird durch den Home Bias im Staatsanleiheportfolio, also die...

Recent developments in Ireland, Greece, and Spain have shown that sovereign debt crises endanger the solvency of domestic banking sectors, while banking crises in turn endanger the solvency of the domestic sovereigns. This diabolic loop between government and bank solvency is exacerbated by the...

Recent developments in Ireland, Greece, and Spain have shown that sovereign debt crises endanger the solvency of domestic banking sectors, while banking crises in turn endanger the solvency of the domestic sovereign. This vicious circle between government and bank solvency is exacerbated by the...

Following Taleb/Tapiero (2009) , the hypotheses are contrasted based on partial information of firms had losses (including external risk factors); the policy implications of this analysis are projected after evaluating two fundamental issues that continue to preoccupy the public opinion: how...

: In Romania, as in many Central and Eastern Europe countries, during the communist regime all the banks were owned by the state and their activities were circumscribed by rigid norms. After the communist regime had fallen, the state owned banks had to adapt to a competitive environment. The...

First externalities risk due to the size of the companies or the principle that large companies are also at risk of bankruptcy (too big to fail) are examined. The problem is illustrated by a case in which extreme risks with negative consequences for savers and investors are taken. If we...

In this paper, using network tools, I analyse systemic impacts of liquidity shocks in interbank market in case of endogenous haircuts. Gai, Haldane and Kapadia (2011) introduce a benchmark for liquidity crisis following haircut shocks, and Gorton and Metrick (2010) reveal the evidence from...

Contingent capital (cocos) instruments are debt securities that automatically co vert into equity if a predetermined trigger (given in terms of equity price or capit ratio) is breached. The dynamic incentive feature of a properly designed continge capital would encourage effective risk...