# kaal:claim:1998455-015

**Claim.** 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.

**Type.** mechanism  **Support.** argued

**Holds when.**

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

**Source quote.**

> 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.

**From.** Wulf A. Kaal, *Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance* (2012), III.D. Recognition as Tier 1 Capital, page 29

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

**Verify.** sha256 of source PDF `1c16ff10a284469ba15fb7ba5523449b917388ee692d9b394f9e8c094544e32c` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Kaal%20-%202012%20-%20Initial%20Reflections%20on%20the%20Possible%20Application%20of%20Contingent%20Capital%20in%20Corporate%20Governance.pdf

**Failure mode.** tier-1-definitional-divergence  (family: harmonization-and-standardization-failure)

**Topics.** regulatory-failure, systemic-risk, contingent-capital

**Keywords.** tier-1-capital, regulatory-arbitrage, harmonization, basel-iii, contingent-capital

**Related claims.**

- extends: https://wulfkaal.github.io/claims/1908473-021
- extended_by: https://wulfkaal.github.io/claims/2061166-038

**Canonical form.** This markdown file is the canonical hashed representation of the claim. Its sha256 is the content hash used for attestation.