# kaal:claim:2957645-025

**Claim.** 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.

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

**Holds when.**

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

**Source quote.**

> 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;

**From.** Kaal, *Dynamic Regulation via Contingent Capital* (2017), IV. Dynamic Regulation Via Contingent Capital, page 14

**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, dynamic-regulation, institutional-design

**Keywords.** contingent-capital, dynamic-regulation, feedback-effects, signaling

**Related claims.**

- specializes: https://wulfkaal.github.io/claims/2831040-040
- extends: https://wulfkaal.github.io/claims/2273857-059
- extends: https://wulfkaal.github.io/claims/1908473-005
- extends: https://wulfkaal.github.io/claims/2273857-056
- extends: https://wulfkaal.github.io/claims/1998455-005

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