Articlegreen2011

Distress in the Financial Sector and Economic Activity

Mark A. Carlson · Thomas B. King · Kurt F. Lewis

60 citations0/0 files storedThe B E Journal of Economic Analysis & Policy

No readable copy stored yet — this record is metadata only.

No open-access location is known for this record yet.

Literature note Cite in a project Citation map

Banking stability, regulation, efficiency Credit Risk and Financial Regulations Financial Distress and Bankruptcy Prediction

Abstract

Abstract We construct daily market-based measures of distance to default for large U.S. financial institutions since 1973. These measures have significant predictive power for institution bankruptcy more than one year in advance. We aggregate the distances to default across institutions to provide an index of the overall health of the financial-services industry. We show that deteriorations in this Financial Institution Health Index are associated with tighter lending standards and higher interest rates on bank loans and precede declines in employment and industrial production. We argue that this points to the condition of financial institutions as an independent source of macroeconomic variability, distinct from traditional accelerator mechanisms.

Paper brief

Loading…

Cite this work

Citation unavailable for this work.

BibTeX RIS CSL-JSON

No public copy is stored for this record, so only the metadata is cited.

Citations in this library

Citation map →

Stored only when both papers are in the corpus — 60 citations exist upstream.

References

1973The Pricing of Options and Corporate Liabilities 1974ON THE PRICING OF CORPORATE DEBT: THE RISK STRUCTURE OF INTEREST RATES*1998The Financial Accelerator in a Quantitative Business Cycle Framework 1988Agency Costs, Net Worth, And Business Fluctuations 1992Insiders and Outsiders: The Choice between Informed and Arm's-Length Debt 2008Forecasting Default with the Merton Distance to Default Model 2024Nonmonetary Effects of the Financial Crisis in the Propagation of the Great Depression 2000Collateral Damage: Effects of the Japanese Bank Crisis on Real Activity in the United States

Cited by

2016Crisis Transmission in the Global Banking Network 2018The impact of corporate environmental reporting on customer-related performance and market value 2020Bank stability and economic growth: trade-offs or opportunities?2022Financial stress transmission between the U.S. and the Euro Area 2022Systemic risk and CO2 emissions in the U.S.2018

Explore the map →

Papers that cite the same references — the relational fallback while embeddings are still backfilling.

Imported from OpenAlex (CC0) — nothing here is generated.