This paper investigates whether overleverage identifies companies' strategic default incentives. The results show that overlevered firms have lower equity beta than their counterparts. The strategic default option becomes more valuable when the firms are overlevered. Firms are more likely to be...

Financial networks provide channels for contagion risks and their topological properties determine financial stability. We extend financial network reconstruction methods to the bipartite network and then compare their reproducibility for the real credit network in terms of different topological...

Banks receive two types of ratings from major rating agencies: an “all-in” and a “stand-alone” rating. This paper investigates whether or not rating gaps between the all-in ratings and standalone ratings could serve as a useful measure for the systemic risk of banks. Using US data from...