# kaal:claim:2957645-021

**Claim.** Appropriate use of contingent capital triggers can further lower the default risk of the contingent capital securities themselves, on top of the moral hazard reduction that comes from internalizing bank failure costs.

**Type.** condition  **Support.** argued

**Holds when.**

- triggers are designed and evaluated appropriately

**Source quote.**

> contingent capital can minimize moral hazard,43 and appropriate use of contingent capital triggers can further lower default risk of CCS.44

**From.** Kaal, *Dynamic Regulation via Contingent Capital* (2017), III. Contingent Capital, page 13

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

**Keywords.** trigger-design, default-risk, moral-hazard, contingent-capital

**Related claims.**

- extends: https://wulfkaal.github.io/claims/1998455-008
- extends: https://wulfkaal.github.io/claims/1908473-016
- extends: https://wulfkaal.github.io/claims/2061166-021
- extends: https://wulfkaal.github.io/claims/2097160-022

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