This paper suggests a motive for bank mergers that goes beyond alleged and typically unverifiable scale economies: preemtive resolution of banks ́financial distress. Such "distress mergers" can be a significant motivation for mergers because they can foster reorganizations, realize...

This paper suggests a motive for bank mergers that goes beyond alleged and typically unverifiable scale economies: preemtive resolution of banks' financial distress. Such "distress mergers" can be a significant motivation for mergers because they can foster reorganizations, realize...

In this paper, we address the question whether the impact of default risk on equity returns depends on the financial system firms operate in. Using an implementation of Merton's option-pricing model for the value of equity to estimate firms' default risk, we construct a factor that measures the...