kaal:claim:1908473-013

Letting national regulators keep their existing Tier 1 capital definitions creates a collective action problem: countries with stricter definitions appear to have less capital and thinner cushions than countries with broader ones.

This creates collective action problems. A country that uses stricter definitions of Tier 1 capital could appear to have less capital and thinner capital cushions than banks in countries with broader definitions for Tier 1 capital.

Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011), II.B. Limitations and Open Issues, p. 21
https://ssrn.com/abstract=1908473 · source PDF

Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473

• Applies where EU wide harmonization of the Tier 1 definition is absent

failuresupport: arguedfailure: tier-1-definition-divergencefamily: harmonization-and-standardization-failureinstitutional-design

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