Countries with a stronger predicted GDP decline in 2020 have also seen a larger number of deaths in excess of official Covid-19 fatalities. Historical data show that recessions are systematically associated with higher mortality, especially in developing economies. Following a recession, death rates remain elevated for several years. The eventual death toll of Covid-19 may be understated if the impact of the pandemic-induced recession is neglected. Limiting the economic fallout of the pandemic could also reduce excess mortality.

We study the effectiveness of policy tools that deal with bank distress (i.e. central bank lending, asset purchases, bank liability guarantees, impaired asset segregation schemes). We present and draw on a novel database that tracks the use of such tools in 29 countries between 1980 and 2016.

We provide a simple and tractable accounting-based stress-testing framework to assess loss dynamics in the banking sector, in a context of leverage targeting. Contagion can occur through direct interbank exposures, and indirect exposures due to overlapping portfolios with the associated price dynamics via fire sales.

Banks with a low price-to-book ratio have a greater propensity to pay out dividends. This propensity is especially marked for banks with a price-to-book ratio below a threshold of 0.7. As a sector, banks also tend to have higher dividend payout ratios than non-financial firms. We demonstrate these features using data for 271 advanced economy banks in 30 jurisdictions.