We investigate the development of non-performing loans (NPL) held by European banks along the economic cycle. During the global financial crisis and the subsequent sovereign debt crisis, banks from all European countries experienced a substantial increase in NPLs. We find that these increases...

We investigate the development of non-performing loans (NPL) held by European banks along the economic cycle. During the global financial crisis and the subsequent sovereign debt crisis, banks from all European countries experienced a substantial increase in NPLs. We find that these increases...

Supervisors frequently use formal enforcement tools to intervene in banks’ financial reporting. However, when managers exercise their discretion within the boundaries of accounting rules, supervisors have to turn to soft and informal actions to nudge, rather than force banks to change their...