Bank distress in the European Union 2008-2015: A closer look at capital, size and revenue diversification

The recent global financial crisis has clearly highlighted the importance of the timely identification of weak banks. This paper introduces and analyses a new sample of European Union (EU) banks, which faced distress during 2008-2015 and provides evidence regarding the relationship between distress and bank-specific, macroeconomic, banking sector and stock market distress determinants, paying particular attention to issues that have been central following the crisis, such as capital, size and revenue diversification. Our findings regarding these variables seem to "connect" well with current supervisory actions. The paper also focuses on banks in EU countries that faced economic problems and documents that the probability of distress in these countries has been influenced by different factors, in comparison to the rest of the EU.