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The doom loop A relation between Sovereigns and banks.: - An panel analysis of Eurozone banks
University West, School of Business, Economics and IT, Divison of Law, Economics, Statistics and Politics.
2020 (English)Independent thesis Basic level (degree of Bachelor), 10 credits / 15 HE creditsStudent thesis
Abstract [en]

This paper analyzes the second component of the doom loop relation between sovereigns and banks in the Eurozone during the period 2012-2017. The purpose of the study is to see if the increase of sovereign debt increases the banks risk. The paper studies Greece, Italy, Portugal and Spain that faced distress during the euro crisis and France, Germany and the Netherlands who were more stable. The study is conducted through a panel regression analysis for the Zscore, representing the bank risk. The results showed that the stable countries of France and the Netherland had an increase in bank risk as sovereign increases their debt bonds while not distressed countries did not. The result shown implies that distressed counties expects to be bailed out by ECB while stable countries does not which makes the second part of the doom loop to be even worse. In conclusion it becomes important for banks to know the intention of their sovereign and the political interventions.

Place, publisher, year, edition, pages
2020. , p. 40
Keywords [en]
Doom loop Bank riskSovereign bonds EurozoneEuro crisis
National Category
Political Science
Identifiers
URN: urn:nbn:se:hv:diva-15536Local ID: EIS501OAI: oai:DiVA.org:hv-15536DiVA, id: diva2:1455259
Subject / course
Political science
Educational program
International Programme in Politics and Economics
Supervisors
Examiners
Available from: 2020-07-23 Created: 2020-07-23 Last updated: 2020-07-23Bibliographically approved

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