Last year, at around the same time, two reforms of deposit insurance systems were announced - one in the United States and the other in the European Union. The American proposal of the reform was triggered by the banking crisis of March 2023 (bank runs and failures) and it was put forward by the...

We use tools from survival analysis to study the equilibrium probability of bank failure in a model with imperfect correlation in loan defaults where a systematic risk factor and idiosyncratic frailty factors govern borrower credit worth. We derive several surprising results: in equilibrium, a...

This paper examines bank failures during the subprime mortgage crisis, emphasizing sibling dynamics within multi-bank holding companies (MBHCs). While traditional risk indicators effectively predict failures for one bank holding companies (OBHCs), they exhibit limited explanatory power for...

Bank failures can stem from runs on otherwise solvent banks or from losses that render banks insolvent, regardless of withdrawals. Disentangling the relative importance of liquidity and solvency in explaining bank failures is central to understanding financial crises and designing effective...

Revolving credit is at the core of the banking business. Corporate revolving credit lines are demandable claims; therefore, as with a traditional bank run on deposits, sudden widespread drawdowns on credit lines can destabilize the banking sector. However, we show that, unlike with deposits,...

This study investigates whether the ratio of long-term investment to total assets, the ratio of cash on hand to total assets, and the ratio of price-to-earnings are risk indicators for bank failures. Silicon Valley Bank (SVB), Signature Bank, and Silvergate Capital Corp., which experienced bank...

The proposed revision of the Swiss Banking Act introduces a public liquidity backstop (PLB) for distressed systemically important banks (SIBs), in part to facilitate resolution. We examine the impact of the PLB on fiscal balances, societal welfare, and the incentives of bank shareholders and...

I develop a banking model with monopolistic competition to analyze the effect of reserve rate policy on bank insolvency risk, when banks are constrained by a zero lower bound on deposit rates. When binding, the lower bound compresses the solvency relevant deposit spread and causes it to be a...

This paper develops an early warning system for predicting distress for large European banks. Using a novel definition of distress derived from banks' headroom above regulatory requirements, we investigate the performance of three machine learning techniques against the traditional logistic...

This paper studies the role of banking supervision in anticipating, monitoring, and disciplining failing banks. We document that supervisors anticipate most bank failures with a high degree of accuracy. Supervisors play an important role in requiring troubled banks to recognize losses, taking...

How much is owed today to Blacks and other groups who have suffered substantial past economic violence? The issue has become extremely relevant given the $105 million reparations program announced by the City of Tulsa on June 1, 2025. To make some progress on this complex issue, this short paper...

Russia has witnessed a high number of bank failures over the last two decades. Using monthly data for 2002-2020, spanning four election cycles, we test the hypothesis that bank failures are less likely before presidential elections. We find that bank failures are less likely to occur in the...

In this third edition of the Resolvability Assessment report, the Single Resolution Board (SRB) takes stock of the progress made by banks in building up their resolvability capabilities until December 2023, in line with the SRB Expectations for Banks. December 2023 marked an important milestone...

Why do banks fail? We create a panel covering most commercial banks from 1865 through 2023 to study the history of failing banks in the United States. Failing banks are characterized by rising asset losses, deteriorating solvency, and an increasing reliance on expensive non-core funding....

This paper examines the consequences of Chinese regulators deviating from a long-standing full bailout policy in addressing the distress of a city-level commercial bank. This policy shift led to a persistent widening of credit spreads and a significant decline in funding ratios for negotiable...