# kaal:claim:2957645-007

**Claim.** By internalizing the costs of bank failure, contingent capital may be able to minimize moral hazard, avoid financial contagion, and limit systemic risk.

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

**Holds when.**

- bank failure costs are actually borne by the institution's own capital structure

**Source quote.**

> By internalizing bank failure costs, contingent capital may be able to minimize moral hazard,14 avoid financial contagion,15 and limit systemic risk.16

**From.** Kaal, *Dynamic Regulation via Contingent Capital* (2017), I. Introduction, page 8

**Cite as.** Kaal, Dynamic Regulation via Contingent Capital (2017). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2957645

**Verify.** sha256 of source PDF `250b10782a5ea5dece9235a7f711aee408feaf36f2e78e310d589b5ee6304be2` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Kaal%20-%202017%20-%20Dynamic%20Regulation%20via%20Contingent%20Capital.pdf

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

**Keywords.** moral-hazard, systemic-risk, financial-contagion, contingent-capital, cost-internalization

**Related claims.**

- restates: https://wulfkaal.github.io/claims/1908473-016
- extends: https://wulfkaal.github.io/claims/1998455-008
- extends: https://wulfkaal.github.io/claims/2061166-021
- extends: https://wulfkaal.github.io/claims/1998455-028

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