Contingent capital trigger effects: Evidence from liability management exercises
This paper studies liability management exercises (LME) by banks, which have comparable regulatory capital effects than contingent capital triggers. LMEs are concentrated on low capitalization situations, both in the cross-section and in the time series and are frequently associated with equity issu...
| Main Author: | |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
Oxford University Press
2019
|
| Online Access: | View Fulltext in Publisher |
| Summary: | This paper studies liability management exercises (LME) by banks, which have comparable regulatory capital effects than contingent capital triggers. LMEs are concentrated on low capitalization situations, both in the cross-section and in the time series and are frequently associated with equity issuances. These exercises prove effective at improving bank capitalization levels. The market reaction to LMEs is positive and mostly accrues to debt holders. These findings strengthen the case for innovative liabilities securities as a tool to improve bank resilience. © The Author(s) 2019. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved. |
|---|---|
| ISBN: | 20469128 (ISSN) |
| DOI: | 10.1093/rcfs/cfz004 |