understand systemic risk and to assess the stability of the banking system. In extreme scenarios, the system may experience a … phase transition when the consequences of one single initial shock affect the entire population. I show that the size and …

reduction. Banking shocks matter more for EA macro variables than for US real activity. Banking shocks account for about 3 …-09), banking shocks accounted for about 12%-20% of the fall in US and EA GDP, and for more than a third of the fall in EA …