Topics: regulation, firms and financial intermediation law, politics and finance monetary policy, inflation, and financial resilience macroprudential policy and real estate financial networks and systemic risk pricing of climate risk in financial markets ecological hazards and the behaviour of...

The anticipation of a future bailout of distressed firms worsens ex ante adverse selection, causing a market freeze at present and inviting government intervention ("bailout trap"). When firms of heterogenous qualities raise financing, high-quality firms are willing to bear adverse selection...