kaal:claim:2097160-020

Ordinary SIFI creditors have suboptimal incentives to monitor management because they implicitly expect that the government will provide bailout funding given the nature of the entity.

Because of an implicit expectation that the government will provide bailout funding due to the nature of the entity, ordinary SIFI creditors may have suboptimal incentives to monitor the performance of management.177

Wulf A. Kaal, Contingent Capital in Executive Compensation (2012), V.B.2 The Benefits of Early Triggers, p. 43
https://ssrn.com/abstract=2097160 · source PDF

Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160

• systemically important financial institutions carrying implicit government guarantees

failuresupport: arguedfailure: Bailout expectation suppresses creditor monitoringfamily: moral-hazard-and-bailout-expectationcompliancerisk-and-incentivessystemic-risk

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