In a situation where the number of non-performing loans (NPLs) increases, lenders may raise interest rates to compensate for potential losses, and the amount of credit granted in the market may decrease, leading to credit rationing. Such actions may become vital based on their potential...

During World War II, French Moroccan troops performed numerous acts of (sexual) violence against the Italian population, known in Italy as the Marocchinate. We demonstrate that these events led to contagion in prejudice: They triggered a pronounced shift to the far right following the recent...

As a cornerstone of the modern financial safety net, the Lender of Last Resort (LOLR) is essential in mitigating liquidity crises and containing financial contagion. However, during periods of economic stability, risk-taking incentives in the banking sector may undermine its effectiveness. Using...

This background paper highlights the urgent need for climate‑resilient sanitation systems as cities face increasing climate‑related pressures. The growing impacts of extreme weather events expose the deep interconnections between sanitation and other essential urban systems, including water...

Systemic crises pose pressing threats and jeopardize economic growth and prosperity. These recurrent events disproportionately affect vulnerable households as well as micro-, small-, and medium-sized enterprises (MSME), all of whose limited financial assets and restricted access to finance...

We develop a novel sentiment measure derived from survey data to empirically vali date the Minsky-Kindleberger view on financial crises. Using survey data from multiple countries, we decompose beliefs into components explained by public information that are orthogonal to optimal machine beliefs,...

The financial crisis of 2007-2008 highlighted the risks that liquidity spirals pose to financial stability. We introduce a novel method for studying liquidity spirals and use this method to identify spirals before stock prices plummet and funding markets lock up. We show that liquidity spirals...

We argue that the rapid asset growth of nonbank financial intermediaries (NBFIs) relative to banks is the outcome of transformations of risks between banks and NBFIs that increase the interconnectedness of the two sectors. These transformations are consistent with avoiding tighter, post-GFC bank...

Using information from the ECB's Bank Lending Survey, we examine how the implementation of borrower-based macroprudential measures (BBMs) between 2009-Q1 and 2023-Q3 affected mortgage lending standards in a sample of 15 euro area countries. We find that banks generally tightened credit standards...

Financial Conditions Indices (FCIs) are a widely used tool for assessing the broader monetary policy stance beyond the central bank's direct control. This paper presents a novel vector autoregressive (VAR) model that includes key macroeconomic variables and maps financial variables into a single...

When default losses elevate borrowing costs, expanding credit cannot stabilize the economy because default rates feed back to lending rates through bank balance sheets. Asset management companies (AMCs) break this loop by purchasing nonperforming loans at their long-run recovery values, thereby...

We document empirically the money demand by European non-financial corporations by exploiting a unique and brand-new survey on their cash usage in a stress period. We also assess: (i) the relation between cash held and firm size; and (ii) estimate point values of cash holdings and carry out...

This paper applies the Growth-at-Risk (GaR) framework to assess downside risks to euro area GDP growth, and it examines its usefulness for stress testing. Supervisory stress-test scenarios are often criticized for being either too mild or implausibly severe, raising questions about calibration....

This paper introduces Bai-Perron structural break detection combined with negative binomial regression to model overdispersed U.S. IPO count data. Using monthly data from 1995 to 2024, we identify five breaks that partition IPO activity into six distinct regimes, each with fundamentally...

This paper studies the international macro-financial implications of U.S. dollar-backed payment stablecoins. These digital assets create a new global safe asset channel that links private money creation and global payment needs directly to U.S. public debt. By reshaping the demand for safe...

This study examines the systemic operational risk in Morocco's banking sector using a Panel VAR model based on data from three banks over ten years. The model includes real GDP, interbank rate (TMP), and bank credit, alongside indicators of operational, credit, and liquidity risks. The Impulse...

Can a recession have a positive, long-term impact on firm innovation? A downturn represents an opportunity for firms to learn from their peers and try to understand the main drivers of resilience. If they deem R&D capital one of them, they may raise innovation in the following years, in order to...

Compared with the relatively straightforward definition of a default event, assessing sovereign debt sustainability remains a grey area. The interaction between fiscal choices, lenders' expectations and economic uncertainty creates a setting in which-particularly when a default...

This study applies the Log-Periodic Power-Law (LPPL) framework to three major equity markets-Mexico (IPC), Brazil (IBOVESPA), and the United States (NYSE Composite)-using daily closes from 8 November 1991-30 January 2025 for IPC and NYSE, and 3 May 1993-30 January 2025 for IBOVESPA. Multi-window...

Financial risk early warning systems are essential for proactive risk management in volatile markets, particularly for emerging economies such as China. This study develops a hybrid deep learning model integrating Convolutional Neural Networks (CNNs), Long Short-Term Memory (LSTM), and Gated...

This study examines how geographic distance to Vietnam's centralized securities regulator-the State Securities Commission (SSC)-influences firm-level stock price crash risk. In emerging markets characterized by weak governance, corruption, and political connections, distance can erode monitoring...

This paper investigates tail-risk transmission and asymmetric dependence in commodity markets using an asymmetric fuzzy vine copula framework applied to gold, crude oil, natural gas, and silver from 1 January 2015 to 1 January 2025, extracted from Yahoo Finance. Bootstrap-based trapezoidal fuzzy...

The over-hyped Dot.com revolution bubbled and crashed at the end of the 1990s, leaving a largely unused physical and virtual infrastructure that eventually supported the rise of social media that did-indeed-transform life. Not necessarily in a good way. As Robert Gordon famously claimed, you can...

After having several multidimensional crises affect Haiti for years, the country is at a critical juncture. Recognizing that tangible economic, social, and institutional recovery must accompany progress in the political transition, the government of Haiti launched the Rapid Crisis Impact...

We develop a general equilibrium framework in which a commercial banker, constrained by capital adequacy requirements, creates a special purpose vehicle (SPV) to hold securitized assets off its balance sheet. By operating the bank and SPV as separate entities, the banker circumvents regulation,...

Palau’s financial system faces structural challenges that inhibit effective financial intermediation, mobilization of domestic savings, and payment system efficiency. The authorities have been striving to address these challenges through digital initiatives. While these initiatives are...

Economic benefits of financial inclusion, meaning a broadening access of the population to financial services, have been studied extensively, but less is known about its potential effects on financial stability. We explore the complementarity between credit booms and episodes of rapid expansion...

Fiat-backed stablecoins are expanding, and their issuers may attain systemic relevance as reserve portfolios grow and as they become increasingly intertwined with financial markets. This paper analyzes the resulting risks and the design choices that can mitigate them. A detailed...

This paper develops a tractable consumption-based asset-pricing model in an i.i.d. economy that combines rare consumption disasters with ambiguity aversion implemented as a one-period entropic tilt under CRRA utility. Closed-form expressions for the risk-free rate, equity return moments, and the...

Climate change has emerged as one of the defining risks in recent years. These risks are associated with economic losses and, ultimately, the stability of the financial system. This study examines the impact of climate change on financial stability in Namibia using quarterly data spanning from...