# kaal:claim:1998455-019

**Claim.** Switching to contingent capital financing could reinforce rather than dampen risk incentives, and these distorted risk incentives are a drawback of contingent capital issuances.

**Type.** failure  **Support.** argued

**Holds when.**

- where the issuing institution is already treated as too big to fail
- the author notes these drawbacks are unlikely to materialize in the near term given the nascent market

**Source quote.**

> In effect, switching to CCS financing could reinforce risk in- centives and these distorted risk incentives could create draw- backs for CCS issuances.

**From.** Wulf A. Kaal, *Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance* (2012), IV.A. Adverse Effects, page 34

**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.** risk-incentive-reinforcement  (family: moral-hazard-and-bailout-expectation)

**Topics.** contingent-capital, risk-and-incentives, systemic-risk

**Keywords.** contingent-capital, risk-incentives, coco-bonds, failure-modes, sifis

**Related claims.**

- restates: https://wulfkaal.github.io/claims/1908473-015

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