kaal:claim:2957645-025

Contingent capital qualifies as a dynamic regulatory mechanism because capital injection is available only if and when needed and because the conversion of contingent capital securities into near worthless equity signals impending regulatory issues to regulators, which creates feedback effects.

Contingent capital is a dynamic regulatory mechanism because (1) capital injection is available only if and when needed; (2) signaling to regulators of impending regulatory issues via conversion of CCS to near worthless equity creates feedback effects;

Kaal, Dynamic Regulation via Contingent Capital (2017), IV. Dynamic Regulation Via Contingent Capital, p. 14
https://ssrn.com/abstract=2957645 · source PDF

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

• contingent capital securities are outstanding and their conversion is observable by regulators

mechanismsupport: arguedcontingent-capitaldynamic-regulationinstitutional-design

• specializes kaal:claim:2831040-040 Regulation of innovation in a dynamic framework is triggered only as a supplement to the existing rulemaking f...
• extends kaal:claim:2273857-059 A contingent capital triggering event signals that management was unable to manage the entity so as to avoid t...
• extends kaal:claim:1908473-005 Because policymakers may adopt a suboptimal single trigger design, and because contingent capital has uses at ...
• extends kaal:claim:2273857-056 Depending on their design, contingent capital securities can function as an early warning system that helps pr...
• extends kaal:claim:1998455-005 Combined with other corporate governance mechanisms, contingent capital securities function as an internal, in...

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