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2014•RePEc: Research Papers in EconomicsOpen access

The negative feedback loop between banks and sovereigns

Paolo Angelini, Giusèppe Grande, Fabio Panetta

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Abstract

More than three years since the outbreak of the sovereign debt crisis in the euro area the banking systems of several countries remain exposed to the vagaries of government bond markets. The paper analyzes the different channels through which sovereign risk affects banking risk (and vice versa), presents some new evidence on bank-sovereign links, and discusses policy options for addressing the related risks.

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What this paper is about

More than three years since the outbreak of the sovereign debt crisis in the euro area the banking systems of several countries remain exposed to the vagaries of government bond markets. The paper analyzes the different channels through which sovereign risk affects banking risk (and vice versa), presents some new evidence on bank-sovereign links, and discusses policy options for addressing the related risks.

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OpenAlex reports 17 citations for this work. Citation counts describe recorded attention and do not establish research quality.

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Available abstract

More than three years since the outbreak of the sovereign debt crisis in the euro area the banking systems of several countries remain exposed to the vagaries of government bond markets. The paper analyzes the different channels through which sovereign risk affects banking risk (and vice versa), presents some new evidence on bank-sovereign links, and discusses policy options for addressing the related risks.

Key concepts: Sovereignty, Financial system, Sovereign debt, Business, Debt, Bond, Government bond, Credit risk

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