Undercapitalisation of banks raised financial distress during crisis: ECB paper

The distress experienced during the financial crisis was driven by bank size, undercapitalisation and the degree of credit expansion in the years preceding it, according to a European Central Bank paper published on Friday.

Yener Altunbas, Simone Manganelli and David Marques-Ibanez, the paper's authors, examine evidence during the 2007–2009 financial crisis to assess how risk relates to bank business models. By examining the effects of the crisis, the authors analyse whether the variability