Contingent Capital: The Trigger Problem
19 Pages Posted: 18 Dec 2012
Date Written: November 10, 2011
Price triggers in contingent capital bonds are analyzed. Pervasiveness of multiple equilibria and nonexistence of equilibrium in theoretical models is illustrated. Evidence of these problems from market experiments is summarized. Possible solutions are evaluated.
Keywords: bank regulation, contingent capital
JEL Classification: G14, G28, G32
Suggested Citation: Suggested Citation