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The negative feedback loop between banks and sovereigns

Author

Listed:
  • Paolo Angelini

    (Banca d'Italia)

  • Giuseppe Grande

    (Banca d'Italia)

  • Fabio Panetta

    (Banca d'Italia)

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.

Suggested Citation

  • Paolo Angelini & Giuseppe Grande & Fabio Panetta, 2014. "The negative feedback loop between banks and sovereigns," Questioni di Economia e Finanza (Occasional Papers) 213, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:opques:qef_213_14
    as

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    File URL: https://www.bancaditalia.it/pubblicazioni/qef/2014-0213/QEF_213.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    sovereign risk; sovereign debt crisis; global financial crisis; banking sector risk; bank regulation; contagion; credit crunch;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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