A Pyrrhic Victory? - Bank Bailouts and Sovereign Credit Risk

By V. Acharya, I. Drechsler, Philipp Schnabl. 2011

1,111 citations recorded by the source corpus.

Subfields: Finance

View Paper: https://www.semanticscholar.org/paper/c093075f137c1f10aaedb1555ddeb4e50c82355a

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Finance

Citations in the corpus

Contagion and Banking Crisis - International Evidence for 2007-2009 (2015, background): “Finally, the statistically significant (at 10 percent) marginal impact of the external debt to GDP ratio on the probability of banking crisis supports the hypothesised feedback loop between sovereign debt and banking crises (Acharya et al., 2011; Adler, 2012).”
Liberal intergovernmentalism and the euro area crisis (2015, background): “…rescuing national banks and banking systems with the member states, a dynamic sovereign–bank nexus developed: governments undertook financial sector bailouts that increased sovereign credit risk, which in turn increased the vulnerability of banks invested in sovereign bonds (Acharya et al. 2011).”
Quantile Connectedness: Modeling Tail Behavior in the Topology of Financial Networks (2022, methodology): “Our second result is that, over the full sample, the adverse feedback effect documented by Acharya et al. (2014) and Farhi and Tirole (2018) manifests as a marked intensification of the bidirectional feedback between each sovereign and its domestic financial sector in the presence of large adverse…”
Bank Exposures and Sovereign Stress Transmission (2017, positive): “That the causality between government and bank solvency can go both ways is highlighted by the models by Acharya et al. (2014), Cooper and Nikolov (2013) and Leonello (2014) and is documented empirically for the euro debt crisis by Acharya et al.”
Understanding the political economy of the eurozone crisis (2017, background): “But this led to growing public debt, which increased the country’s sovereign credit risk, which further weakened the financial system, and thus created a negative bank–sovereign loop (Acharya et al. 2014).”
In sickness and in debt: The COVID-19 impact on sovereign credit risk (2020, methodology): “Since sovereign credit risk is intimately connected to a country’s financial risk ( Acharya et al., 2014 ) and currency depreciation ( Reinhart, 2002; Na et al., 2018; Augustin et al., 2020 ), we obtain the return for each country’s major stock index and exchange rate from Capital IQ.”
Debt Overhang, Rollover Risk, and Corporate Investment: Evidence from the European Crisis (2018, positive): “The work by Acharya et al. (2014b) use data on syndicated loans in Europe, matched to ORBIS/AMADEUS database, to estimate the effect of shocks to periphery banks on investment of firms who borrow from these banks in the syndicated loan market.”
Transmission channels of systemic risk and contagion in the European financial network (2015, neutral): “Global financial market participants were directly impacted by its default and numerous repercussions were felt throughout the world, resulting from a plethora of cross-border and cross-entity interdependencies (De Haas et al. 2012; Acharya et al. 2014).”
European integration (theory) in times of crisis. A comparison of the euro and Schengen crises (2018, background): “Governments undertook bailouts of their domestic banks; these bailouts increased sovereign credit risk, which in turn increased the vulnerability of banks invested in sovereign bonds and the interest governments had to pay for continued access to credits (Acharya et al. 2011).”