We argue that the risk of banks is hard for outsiders to judge because the risk of their mostly financial assets is either hard to measure (opaque) or easy to change. We report evidence that bond rating agencies seem to disagree more over banks than over other types of firms. Among banks, bond...

An examination of the credit performance of the financial sector in the modern British economy, showing that problems in credit markets associated with debt and default/liquidation can disrupt the production of real financial services necessary to channel funds to efficient investment opportunities.