Corporate credit lines are drawn more heavily when funding markets are more stressed. This covariance elevates expected bank funding costs. We show that credit supply is dampened by the associated debtoverhang cost to bank shareholders. Until 2022, this impact was reduced by linking the interest...

Transitioning to a low-carbon economy involves risks for the value of financial assets, with potential ramifications for financial stability. We quantify the systemic impact on financial firms arising from changes in the value of financial assets under three climate transition scenarios that...

Banks’ credit varied asymmetrically in the upward and downward phases of the business cycles. Board involvement in preparing credit policies, sanctioning big-ticket loans, risk management practices, and overall corporate governance is very important for the functional stability of banks....

This paper shows that strong ESG taste leads to higher tail risk in high-ESG stocks (Green stocks) compared to low-ESG stocks (Brown stocks) during market crashes. Indeed, in crash episodes, strong ESG taste induce investors to hold Green stocks despite negative expected return. Logically, the...

This research examines the role financial services played in facilitating Ukrainian women refugees’ journeys following the Russian invasion. Financial services are argued to promote financial resilience, defined as the ability to respond to unexpected events with adverse financial impacts. The...

External imbalances played a pivotal role in the run-up to the global financial crisis, being an important underlying cause of the ensuing turmoil. While current account (flow) imbalances have narrowed in the aftermath of the crisis, net international investment position (stock) imbalances still...

We investigate implications of banks using contingent-convertible (CoCo) futures contracts to hedge financial-sector risk. As a microprudential policy tool, the bail-in feature of CoCo futures allows value-maximizing banks to dramatically reduce default probabilities in spite of choosing...