Utilising a unique data set with annual accounts from around 37,000 Danish non-financial firms spanning one and a half decade or so, we offer microeconometric evidence on bankfirm relationships and the performance of non-financial firms during the financial crisis 2008-09. Two major conclusions...

We develop a model of neural networks to study the bankruptcy of U.S. banks. We provide a new model to predict bank defaults some time before the bankruptcy occurs, taking into account the specific features of the current financial crisis. Based on data from the Federal Deposit Insurance...

This article reviews the origin and spread of the distressed debt problem in the transition region. We argue that while the crisis was triggered abroad, the current high level of distressed debt in various transition countries mainly reflects home-grown vulnerabilities. As in the West, the root...

This article presents arguments and evidence suggesting that the bankruptcy abuse reform (BAR) of 2005 may have been one contributor to the destabilizing surge in subprime foreclosures. Before BAR took effect, overly indebted borrowers could file bankruptcy to free up income to pay their...

This paper, for the first time investigates the effects of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 on subprime mortgage performance. Based on a large mortgage dataset, the study quantifies that the new legislation successfully reduces the number of subprime mortgage...

Banking system crises are complex events that in a short span of time can inflict extensive damage to banks themselves and to the external economy. The crisis liter- ature has so far identified a number of distinct effects or channels that can propagate distress contagiously both directly within...

We examine whether corporate bankruptcies influence bank loan characteristics of geographically proximate firms. Controlling for industry contagion and local economic conditions, firms headquartered near a bankruptcy event experience a seven basis point increase in loan spreads. The effect is...

We develop a new model for solvency contagion that can be used to quantify systemic risk in stress tests of financial networks. In contrast to many existing models it allows for the spread of contagion already before the point of default and hence can account for contagion due to distress and...