https://macropaperwarehouse.com/authors/luc-laeven/Luc LaevenHugo -- gohugo.ioen-ushttps://macropaperwarehouse.com/papers/permanent-capital-losses-after-banking-crises/https://macropaperwarehouse.com/papers/permanent-capital-losses-after-banking-crises/<p><strong>Research Question</strong></p> <p>This paper investigates two interrelated questions about historical banking crises: (1) whether bank losses during banking crises are primarily temporary or permanent in nature, and (2) whether policy interventions — particularly liquidity-based interventions — are effective at restoring bank capitalization after such crises. The paper positions these questions against a theoretical divide: models stressing temporary price dislocations (binding borrowing constraints, depositor fragility, information frictions) versus models in which crises reflect fundamental and permanent deterioration in the value of bank assets.</p>