1. Publications
  2. Journal of Financial Stability, October 2016
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National Politics and Bank Default Risk in the Eurozone

We study the impact of national politics on default risk of eurozone banks as measured by the stock market-based Distance to Default. We find that national electoral cycles, the power of the government as well as the government’s party ideological alignment significantly affect the stability of banks in the eurozone member countries. Moreover, we show that the impact of national politics on bank default risk is more pronounced for large as well as weakly capitalized banks.

31. October 2016

Authors Stefan Eichler Karol Sobanski

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Keywords

stock market bank default distance to default euro area financial policy

JEL Classification

G13 G18 G21 G28

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Professor Dr Stefan Eichler
Professor Dr Stefan Eichler

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