Publications
Publications
- September 2019
- Review of Corporate Finance Studies
Contingent Capital Trigger Effects: Evidence from Liability Management Exercises
By: Boris Vallée
Abstract
This paper investigates the so called liability management exercises by European banks, which bear comparable effects to triggering contingent capital. I first explore the determinants of these exercises. I then study market reactions to these operations as well as banks' economic performance following them. Debtors positively receive these exercises, while stockholders discriminate according to the terms of the operation. Moreover, banks implementing liability management exercises exhibit higher economic performance than the ones that do not. These findings point towards contingent capital offering an effective solution to the dilemma of bank capital regulation.
Keywords
Contingent Capital; Financial Distress; Regulatory Capital; Financial Institutions; Legal Liability; Management; Banking Industry; Europe
Citation
Vallée, Boris. "Contingent Capital Trigger Effects: Evidence from Liability Management Exercises." Review of Corporate Finance Studies 8, no. 2 (September 2019): 235–259.
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