kaal:claim:1998455-003

Because governments prioritize the rescue of systemically important financial institutions over other entities, those institutions are incentivized to adopt similar risk profiles and to correlate their risks.

Source quote, verbatim

Government prioritization of SIFI bailouts could incentivize SIFIs to adopt similar risk profiles and correlate risks.

From

Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012), I. Introduction, p. 5
https://ssrn.com/abstract=1998455 · source PDF

Cite as

Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455

Holds when

where governments visibly prioritize SIFI bailouts because of systemic implications

Classification

mechanismsupport: arguedfailure: correlated-risk-profilesfamily: systemic-risk-transmissionsystemic-riskrisk-and-incentives

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