3Note that we lose one year of data by setting the analysis in a forward-looking perspective, that is by
forwarding bank distress and bank default events by one year with respect to the explanatory variables.
4Note that the merger treatment causes the total number of banks in the dataset to exceed the
maximum number of banks in a given time period.
5Note that the Bundesbank distress database is only available until 2006. Hence, from 2007-2010
we define a restructuring merger in a way that the bank being taken over experienced a severe distress
event within the three years before the merger (i.e., a low capital ratio, a capital support measure, or a
moratorium).