kaal:claim:2061166-021

Contingent capital supports general risk control and reduces moral hazard by holding shareholders responsible and internalizing the costs of bank failure rather than externalizing them onto taxpayers.

Contingent capital may also support general risk control in financial institutions454 and may contribute to minimizing moral hazard by holding shareholders responsible and internalizing bank failure costs.

Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012), IV. CONTINGENT CAPITAL IN BANK RESTRUCTURING, p. 53
https://ssrn.com/abstract=2061166 · source PDF

Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166

mechanismsupport: arguedcontingent-capitalrisk-and-incentivescorporate-governance

• restates kaal:claim:1998455-008 Contingent capital contributes to minimizing moral hazard by internalizing bank failure costs, that is, by pla...
• extended_by kaal:claim:2957645-007 By internalizing the costs of bank failure, contingent capital may be able to minimize moral hazard, avoid fin...
• restates kaal:claim:1908473-016 By internalizing the costs of bank failure, contingent capital can reduce moral hazard, and because a continge...
• extended_by kaal:claim:2957645-021 Appropriate use of contingent capital triggers can further lower the default risk of the contingent capital se...
• extends kaal:claim:1998455-034 Management incentives for risk control are heightened upon conversion, especially where management knows that ...

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