Contingent Capital: The Trigger Problem

19 Pages Posted: 18 Dec 2012

See all articles by Edward S. Prescott

Edward S. Prescott

Federal Reserve Banks - Federal Reserve Bank of Cleveland

Multiple version iconThere are 2 versions of this paper

Date Written: November 10, 2011

Abstract

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

Prescott, Edward (Ned) Simpson, Contingent Capital: The Trigger Problem (November 10, 2011). FRB Richmond Working Paper No. 11-07. Available at SSRN: https://ssrn.com/abstract=2190612 or http://dx.doi.org/10.2139/ssrn.2190612

Edward (Ned) Simpson Prescott (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Cleveland ( email )

P.O. Box 6387
Cleveland, OH 44101
United States

HOME PAGE: http://https://www.clevelandfed.org/people-search?pid=f8ca941e-4b51-41f6-95f8-c87f1d3806e5

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