In this paper we study the role of portfolio diversification on optimal default of sovereign debt in a two-country model with large economies that are financially integrated. Financial integration increases the incentives to default not only because part of the defaulted debt is owned by foreigners (the standard redistribution channel), but also because the endogenous macroeconomic cost for the...

“Bailing out” has recently become a standard expression in newspapers’ business sections all over the world. First, there was the financial sector, followed by the automotive industry until finally many large and middle-sized companies longed for public help. The survival of huge corporations or crucial financial institutions is of great interest in a crisis that has come close to a collapse of...

Using a sample of 155 IPOs that delist due to performance-related reasons shortly after going public, this paper sheds light on the motives of entrepreneurs and early investors in taking their firm public. I empirically examine the actions of insiders over the entire public life of the IPO firm in order to understand whether they knowingly sell overvalued equity. I examine the behavior and the ...

Euro area countries have recently moved to a new centralized bail-in framework by removing implicit public guarantees. Our paper analyzes banks' funding strategies after the proposal. We show that banks relied more on cheaper and better protected sources of funding, such as deposits, reduced fund collection from with weaker creditor protection, bonds.