Using a large bank-level dataset, we test the relevance of both structural liquidity and capital ratios as defined in Basel III on banks' probability of failure. To include all relevant episodes of bank failure and distress (F&D) occurring in the EU-28 member states over the past decade, we develop a broad indicator that includes information not only on bankruptcies, liquidations, under receivership and dissolved banks, but also accounts for state interventions, mergers in distress and EBA stress test results. Estimates from several versions of the logistic probability model indicate that the likelihood of failure and distress decreases with increased liquidity holdings, while capital ratios are significant only for large banks. Our results provide support for Basel III's initiatives on structural liquidity and for the increased regulatory focus on large and systemically important banks.

This paper investigates the joint and separate effects of Environmental (E), Social (S), and Governance (G) scores on bank stability. Using a sample of European banks operating in 21 countries over 2005-2017, we find that the total ESG score, as well as its sub-pillars, reduces bank fragility during periods of financial distress. This stabilizing effect holds strongly for banks with higher ESG ratings. These results are confirmed by a differences-in-differences (DID) analysis built around the introduction of the EU 2014 Non-Financial Reporting Directive (NFRD). Our evidence also reveals that, in times of financial turmoil, the longer the duration of ESG disclosures, the greater the benefits on stability. Finally, we show that the ESG-bank stability linkages vary significantly across banks' characteristics and operating environments. Our findings are robust to selection bias and endogeneity concerns. Overall, they support the regulatory effort in requiring an enhanced disclosure of non-financial information.

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Based on a sample of cooperative, savings, and commercial banks from OECD countries, this paper examines whether and to what extent cooperative banks affected average bank soundness during 2001-2010. To account for the impact of the recent financial crisis, we analyse separately the pre-crisis period (2001)(2002)(2003)(2004)(2005)(2006) and crisis years (2007)(2008)(2009)(2010). Unlike published claims that blame the fragility of banking systems on the presence of non-profit-maximising entities, our main finding is that cooperative banks have explanatory power for stabilisation during the crisis years, but only above a certain market share threshold.Source: BankScope database, authors' calculations. 1 In 2010, the CB share in Canada and Japan was equal to 3.49% and to 15.72%, respectively. The market share is calculated as the ratio of the sum of total assets of all cooperative banks in the country to the total assets of all bankscooperatives, savings and commercialin the same country. The values of CB total assets were collected by the European Association of Cooperative Banks (EACB), while the values on the total assets of all banks were collected by the Organisation for Economic Co-operation and Development (OECD). maintain that CBs tend to increase the fragility of their respective financial system. To our knowledge, no empirical work published so far has explored the role of CBs in financial stability while taking into account the recent financial crisis. Moreover, only a limited number of studies focus on an international sample of banks.Given the mixed empirical results in the related literature and consequent stimulus to further investigate the contribution of CBs to bank stability, especially after the onset of the financial crisis, this paper aims to shed some light on the role of CBs, based on a sample of OECD banks over a period that includes the recent financial crisis (2001)(2002)(2003)(2004)(2005)(2006)(2007)(2008)(2009)(2010). Building upon the work of Hesse and Č ihák (2007), we first examine the idiosyncratic stability of the business and governance models adopted by banks, distinguishing between commercial banks, savings banks, and CBs. We successively analyse whether and to what extent CBs impact on average bank soundness, and especially on large banks. Bank stability is proxied by the z-score, a widespread accounting measure Graham, 1986, 1988;Boyd and Runkle, 1993;Maechler et al., 2005; Laeven, 2006, Demirgüç-Kunt andHuizinga, 2010;Beck et al., 2012). To evaluate whether the impact of CBs on banking system resilience changes with varying macroeconomic and financial conditions, the empirical analysis was carried out in both the pre-crisis and crisis periods. The empirical analysis uses a generalised method of moments (GMM) estimator and focuses on bank-specific factors, including a set of dummy variables accounting for the business models adopted by banks, and on a number of country-specific variables.This paper contributes to the literature in several ways. First, to the best of our know...

This is the accepted version of the paper.This version of the publication may differ from the final published version. Permanent repository link AbstractBased on a sample of mid-tier and top-tier internationally active banks with five-year senior CDS, this paper investigates the determinants of CDS spreads and whether CDS spreads can be