An Analysis of European Banks Snd Issues and its Implications for the Design of a Mandatory Subordinated Debt Policy

Posted: 10 Jun 2002

See all articles by Andrea Sironi

Andrea Sironi

Bocconi University - Department of Finance

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Abstract

During the last twenty years an increasing number of proposals to improve bank market discipline through the introduction of a mandatory subordinated debt policy (MSDP) have been presented and critically discussed by academic economists and bank regulators. While theoretical issues are key in this debate, a proper understanding of the market for banks' subordinated notes and debentures (SND) and the main features of securities is also considered relevant for the potential introduction, design and goals setting of such a policy. This paper builds on information concerning issuers, investors, markets, pricing and the technical features of securities to critically discuss these aspects. Data on over 1,800 European banks SND issues completed during the 1988-2000:Q1 period together with information on primary and secondary market functioning are presented.

Keywords: bank, capital regulation, market discipline, subordinated debt

JEL Classification: G15, G21, G28

Suggested Citation

Sironi, Andrea, An Analysis of European Banks Snd Issues and its Implications for the Design of a Mandatory Subordinated Debt Policy. Journal of Financial Services Research, Vol. 20, No. 2/3, Pp. 233-266, October 2001, Available at SSRN: https://ssrn.com/abstract=312666

Andrea Sironi (Contact Author)

Bocconi University - Department of Finance ( email )

Via Roentgen 1
Milano, MI 20136
Italy

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