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8. Timotej Homar

Intervention in Systemic Banking Crises, February 2016

Systemic banking crises often continue into recessions with large output losses. Governments and central banks intervene to preserve the key functions of the financial system and to mitigate the adverse impact of financial distress on economic growth. This thesis investigates how effective intervention measures are. Do they reduce the duration of recessions? And more specifically, what are the effects of bank recapitalizations? In addition, it analyzes the determinants of forbearance, a practice of extending or renewing loans to borrowers in distress, typical for banking crises. Finally, it evaluates the robustness of stress tests and other measures of bank vulnerability.