A dual early warning model of bank distress

Nikolaos Papanikolaou ()

Economics Letters, 2018, vol. 162, issue C, 127-130

Abstract: We develop a model that estimates the joint determination of the probability of a distressed bank to go bankrupt or to be bailed out. We obtain precise parameter estimates and superior in- and out-of-sample forecasts, which demonstrate that the determinants of failures differ from those of bailouts. Overall, we provide a concrete and reliable mechanism for preventing welfare losses due to bank distress.

Keywords: Financial crisis; Bank distress; Early warning model; Forecasting power (search for similar items in EconPapers)
JEL-codes: C24 C53 G01 G21 G28 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Working Paper: A Dual Early Warning Model of Bank Distress (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:162:y:2018:i:c:p:127-130

DOI: 10.1016/j.econlet.2017.10.028

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