Bank failures in europe during the financial crisis

• Autor(a) principal: Alves, Marta Isabel Guerra
• Data de Publicação: 2012
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10071/12421
• topic: Financial crisis; Bank; Default; Government bailouts; Crise financeira; Banca; Macroeconomia; Falência; Incumprimento; Resgate financeiro estatal

We assemble a new data set on bank failures, bailout with public finances, in the European Union (E.U.), in the wake of the on-going financial crisis. Our model is estimated with data on 444 commercial banks from 19 countries in Europe over 2004-2010, which yields a sample of 1,504 unbalanced panel observations. Results show that bank failures were critically determined by financial accounting information and macroeconomic conditions, and that macroeconomic information improves the forecasting ability of our model over and above financial accounting information. The predictors from our model can be used by monetary authorities to predict bank failures, and the probabilities to assess pressure in the banking sector, the pricing of credit, and their derivatives. Our findings are consistent with recent regulatory impositions in the Basel setting that require banks to hold higher capital levels and lower risks.