This article is focusing on the economic literature attempting to solve the problem of the impossible trilemmas of the euro area, by reconciling the relations between the three essential pillars - supranational monetary independence, national fiscal independence and the no bail-out clause...

In the wake of the COVID-19 pandemic, the Russian war of aggression against Ukraine and the resurgence of the Middle East conflict, government measures to support the economy have intervened massively in economic activity and thus influenced the real insolvency situation. This situation creates...

This study tests the connectionbetween corporate governance structures and firm value, incorporating financial distress as a mediating mechanism among construction companies listed in ASEAN markets. Utilizing a sample of 58 firms drawn from an initial population of 169 companies over the...

We use a novel data set containing all corporate loans throughout the Eurozone to document a series of novel stylized facts on the relationship between collateral and the probability of default. First, we show that the pervasive empirical finding that riskier borrowers pledge collateral is...

The Financial Lobster Bias describes how SMEs, driven by distorted liquidity perceptions, engage in aggressive expansion until financial breakdown occurs. Using data from 10,412 Spanish SMEs (2000-2024), this study shows that liquidity misperception-measured through two versions of the Liquidity...

Conventional credit risk models understate tail risk by centering on mean default probabilities and neglecting distributional and sectoral heterogeneity. We propose a Quantile Probability of Default (QPD) framework based on unconditional quantile regressions estimated on flow default rates from...

Interpretability analysis methods, such as LIME and SHAP, are widely employed to explain the predictions of artificial intelligence models; however, they primarily function as post hoc tools and do not directly quantify the intrinsic interpretability of the models. Although it is commonly...

We investigate how the use of bankruptcy as an implicit health insurance varies across households, focusing on heterogeneity by asset holdings, race, marital status, and educational attainment. Using a difference-in-differences design based on the 2005 bankruptcy reform, we find that the reform...

Existing research on financial distress typically treats failure as a single event and pays limited attention to the dynamic dependence between recurrent distress episodes. Ignoring such dependence can lead to biased hazard estimates and weaker predictive performance. We propose a...

This note reviews empirical evidence on the impacts of insolvency regimes on entrepreneurship, access to credit, preservation of viable businesses and jobs, and other variables contributing to economic development. Its objective is to provide policy makers with evidence to guide insolvency...

This article provides a novel insight into whether earnings manipulation signals are reflected in banks' internal credit risk estimates, as measured by the probability of default (PD) estimates, and whether such manipulation has an impact on credit risk (point in time or deferred). The...

Nowadays, the European economy faces significant global challenges that threaten the continuity of economic growth, especially in the German manufacturing sector, which is under strain from financial turmoil, resulting in numerous layoffs and firm closures. In this respect, FinTech significantly...

This study develops a machine learning framework to improve the prediction of automobile loan defaults by integrating explainable feature selection with advanced resampling techniques. Using publicly available data, we compare Logistic Regression, Random Forest, eXtreme Gradient Boosting...

Britain's debt was nil in 1688 and 60% of GDP in 1717. From 1717 to 1722 the debt was restructured, including through the South Sea operation of 1720. I discuss the reasons for the restructuring and the tensions it revealed between taxpayers and creditors. The South Sea bubble turned the...

The Global Emerging Markets Risk Database Consortium (GEMs) is a joint initiative between the European Investment Bank and the International Finance Corporation; it was established in 2009 to pool credit risk data. This database is a unique example of a tangible common good and is designed to...

Which strategic capabilities simultaneously drive innovation and learning from failures (LFF)? We address this question with two objectives. First, synergies between innovation performance, failures, and LFF strategies are assessed. Second, heterogeneities in the determinants of these processes...

In a struggling and volatile economy like Pakistan, studying corporate financial distress (FD) is critically important. The current sustainability-oriented economic dynamics have made the connection between corporate social responsibility (CSR) and FD particularly relevant, as CSR can enhance...

We show that credit constraints significantly increase the risk that firms are infiltrated by organized crime, defined as the covert involvement of criminal organizations in corporate decision-making. Using confidential data on criminal investigations, credit ratings, and loan histories for the...