kaal:claim:1998455-015

Divergent national definitions of Tier 1 capital produce a distortion: financial institutions in countries with stricter definitions that exclude contingent capital appear to hold less capital and thinner capital cushions than institutions in countries with broader definitions, and investors may read that appearance as a negative attribute.

Financial institutions in countries that use stricter definitions on Tier 1 capital and do not recognize contin- gent capital as Tier 1 capital could appear to have less capital and thinner capital cushions than financial institutions in countries with broader definitions for Tier 1 capital.

Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012), III.D. Recognition as Tier 1 Capital, p. 29
https://ssrn.com/abstract=1998455 · source PDF

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

• absent harmonized EU wide or international standards for Tier 1 capital

mechanismsupport: arguedfailure: tier-1-definitional-divergencefamily: harmonization-and-standardization-failureregulatory-failuresystemic-riskcontingent-capital

• extends kaal:claim:1908473-021 Without a degree of international convergence in contingent capital rules, regulatory arbitrage could undermin...
• extended_by kaal:claim:2061166-038 Without a degree of similarity and convergence in bank resolution and contingent capital rules, regulatory arb...

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