kaal:claim:1998455-028

Contingent capital securities approximate the characteristics of a quasi-public good: just as ships cannot readily be excluded from a lighthouse, systemically important institutions benefit from the issuance of contingent capital by other such institutions whenever the design minimizes systemic risk and contagion.

CCS could have the potential to approximate quasi-public good characteristics. Similar to the difficulty of excluding ships from using the services of a lighthouse,219 SIFIs may benefit from the issuance of CCS by other SIFIs if the CCS design min- imizes systemic risk and contagion.

Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012), VII.A. A Quasi-Public Good, p. 42
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

• only if the CCS design actually minimizes systemic risk and contagion

definitionalsupport: arguedcontingent-capitalsystemic-riskrisk-and-incentives

• extended_by kaal:claim:2957645-007 By internalizing the costs of bank failure, contingent capital may be able to minimize moral hazard, avoid fin...

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