Bank bailouts increase firms’ default risk – Bundesbank paper

Deutsche Bundesbank headquarters, Frankfurt
The Deutsche Bundesbank
Fabian Stürtz

Non-financial firms are significantly more likely to default if a bank supplying them with credit needs a bailout, a working paper published by the Deutsche Bundesbank finds.

In The real effects of bank distress: evidence from bank bailouts in Germany, Johannes Bersch, Hans Degryse, Thomas Kick and Ingrid Stein investigate the impact of banks’ distress on the firms they lend to.  

The authors use what they call comprehensive data on recent German bank bailouts. They say their study identifies

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