Regulators are often unable to supervise financial institutions effectively because of insufficient public funding, and contingent capital securities could help fill the void that this supervisory incapacity leaves.
Source quote, verbatim
Given this potential, CCSs could help fill a void left by regulators' inability to supervise financial institutions effectively, often the result of insufficient public funding.
Kaal, Dynamic Regulation via Contingent Capital (2017). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2957645
Holds when
supervisory agencies operating under funding constraints
Classification
failuresupport: assertedfailure: Underfunded supervision leaves a monitoring voidfamily: supervisory-capacity-gapcontingent-capitalsystemic-risk
Related claims
restateskaal:claim:1998455-005 Combined with other corporate governance mechanisms, contingent capital securities function as an internal, in...
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