Working papers

Natural disasters and bank stability: Evidence from the U.S. financial system (with Felix Noth). Research Center SAFE working paper No. 167 (NEW VERSION APRIL 2018), PDF.

Abstract: We document that weather-related natural disasters significantly weaken the stability of banks with business activities in affected regions, as reflected in lower z-scores, higher probabilities of default, higher non-performing assets ratios, higher foreclosure ratios, lower returns on assets, and lower bank equity ratios. The effects are economically relevant and suggest that insurance payments and public aid programs do not sufficiently protect bank borrowers against financial difficulties. We also find that the adverse effects on bank stability dissolve after some years if no further disasters occur in the meantime.

What drives banks' geographic expansion? The role of locally non-diversifiably risk (with Reint Gropp and Felix Noth). AFA 2016 conference paper, new version coming soon

Abstract: Why do some banks react to deregulation by expanding geographically while others do not? This paper examines this question using exogenous variation in locally non-diversifiable risk that banks face in their home state. As a measure of locally non-diversifiable risk we use data on damages arising from natural disasters in the U.S. Combining this data with information on the staggered deregulation in the 90s, we find that banks facing risks from natural disasters expand significantly more into other states after deregulation than banks that do not face such risks. Only large banks are able to take advantage of deregulation, small banks are not. Finally, banks that do expand, do not necessarily seek to reduce their exposure to risk when expanding.

What Drives the Sovereign-Bank Nexus? (with Isabel Schnabel). new version coming soon

Abstract: The positive relationship between bank and sovereign credit risk in the Eurozone, the so-called sovereign-bank nexus, is seen as a major threat for the stability of the Eurozone. This paper explores potential bank-level and country-level drivers of this relationship. We find that banks' home bias in their sovereign exposures and their low equity ratios as well as countries' high debt-to-GDP ratios and low perceived government effectiveness are positively related to the sovereign-bank nexus. While these results do not necessarily reflect causal relationships, they suggest that promoting banks' diversification of sovereign exposures could be an effective measure to mitigate the sovereign-bank nexus.

Selected publications

How do banks react to catastrophic events? Evidence from Hurricane Katrina (with Claudia Lambert and Felix Noth), 2018, Review of Finance forthcoming. AEA 2012, EFA 2012, FIRS 2012 conference paper, Research Center SAFE working paper No. 94 (September 2017).

Add-On Pricing in Retail Financial Markets and the Fallacies of Consumer Education (with Michael Kosfeld), 2017, Review of Finance 21, 1189-1216. Previous versions are available as AEA 2010 conference paper, Econometric Society World Congress 2010 conference paper, CEPR Discussion Paper No. DP8636, IZA Discussion Paper No. 6061, Research Center SAFE working paper No. 47 (September 2016).

How do insured deposits affect bank risk? Evidence from the 2008 Emergency Economic Stabilization Act (with Claudia Lambert and Felix Noth), 2017, Journal of Financial Intermediation 29, 81-102. Research Center SAFE working paper No. 38 (October 2015).



Further publications and policy papers

Structural Reforms in Banking: The Role of Trading (with Jan-Pieter Krahnen and Felix Noth), 2017, Journal of Financial Regulation 3, 66-88. PDFA previous version is available as SAFE Policy White Paper No. 33. PDF. A summary in German is available as "Ein Verbot wäre wenig zielführend", Bankmagazin (04/2016).

Auswirkung der Einlagensicherung auf das Bankenrisiko (with Claudia Lambert and Felix Noth), 2016, Ökonomenstimme, 17. Feb. 2016.

Funktionen und Einsatz von Finanzderivaten, 2008/2009/2012/2015  (until 2012 with Sascha Steffen), in: Jean-Claude Zerey (Hrsg.), Finanzderivate, Baden-Baden: Nomos, p. 43-67.

Regulatory forbearance and the role of financial reporting transparency during a bank crisis (with Olaf Clemens), 2014, Credit and Capital Markets (previously Kredit und Kapital), volume 47, issue 1, pp. 49-77, PDF.

Germany: The persistence of the three pillar banking system (with Dilek Bülbül and Reinhard H. Schmidt), 2014, in: Butzbach and von Mettenheim (Eds.), Alternative Banking and Financial Crisis, London: Pickering & Chatto Publishers (now Routledge).

Caisses D’Épargne et Banques Coopératives en Europe (with Dilek Bülbül and Reinhard H. Schmidt), 2013, Revue d’Économie Financière, No. 111, pp. 159-187. Also available in English as “Savings Banks and Cooperative Banks in Europe”, Goethe-University SAFE White Paper Series No. 5 (August 2013). Shorter versions are available in German as „Vielfalt im Bankenwesen bewahren“, Bankmagazin (Dezember 2013) and in English as „Savings Banks and Cooperative Banks in European Banking Systems“, SAFE BANK (2013), published by the Polish Bank Guarantee Fund, pp. 38-49. French publication, PDF (english version).

New projects

Monetary Policy and Bank Lending: A Natural Experiment from the US Mortgage Market (with Carlo Wix).

Banking Crisis and Corporate Innovation (with Steffen Juranek).



Selected Conferences and Presentations


TU Munich*, NHH Bergen (planned)


Kolloquium Recht und Ökonomie, University of Bonn; VHB annual meeting, St. Gallen; Verein für Socialpolitik, Wien


American Finance Association Annual Meeting, San Francisco; Workshop in Financial Economics, Bonn; Verein für Socialpolitik, Augsburg


European Economic Association Annual Meeting, Mannheim; IWH-FIN-FIRE workshop, Halle


Bundesbank/DIW/ESMT/CfS conference on Achieving Sustainable Financial Stability*, Berlin; CEPR conference on Financial Stability and Regulation*, Barcelona; Research Workshop in Financial Economics, Mainz


FIRS Annual Meeting, Dubrovnik; European Finance Association Annual Meeting, Cambridge


American Economic Association Annual Meeting, Chicago; CEPR Winter Conference on Financial Intermediation, Lenzerheide; FIRS Annual Meeting, Minneapolis; European Finance Association*, Copenhagen


American Economic Association Annual Meeting, Atlanta; Econometric Society World Congress, Shanghai; German Finance Association, Hamburg; German Economic Association (Verein für Socialpolitik), Kiel


Eastern Finance Association Annual Meeting, Washington; German Economic Association (Verein für Socialpolitik), Magdeburg


CEPR/ ECGTN Summer School on Corporate Governance, Santander; European Financial Management Association, Athens; Deutsche Bundesbank research seminar, Frankfurt

* Presentation by a co-author.