Analysis of proposals for a minimum subordinated debt requirement / William W. Lang and Douglas Robertson.

Format:

Book

Government document

Author/Creator:

Lang, William W.

Contributor:

Robertson, Douglas D.

United States. Office of the Comptroller of the Currency

Series:

Economic and policy analysis working paper (2000) ; 2000-4.

Economic and policy analysis working paper ; 2000-4

Language:

English

Subjects (All):

Banks and banking--United States--Rules and practice.

Banks and banking.

Risk management.

risk management.

United States.

Genre:

Rules.

Physical Description:

1 online resource (39 pages)

Place of Publication:

[Washington, D.C.] : U.S. Office of the Comptroller of the Currency, [2000]

Summary:

"Increasing the effectiveness of market discipline in regulated financial markets has emerged as a major policy issue for banking regulators. Perhaps the most prominent proposal for increasing market discipline is the proposal to require banks to issue publicly held subordinated debt. Subordinated debt holders can discipline banks either directly by demanding higher yields for riskier institutions or indirectly by means of market signals. This paper explores the fundamental rationale behind mandatory subordinated debt proposals, and discusses the advantages and disadvantages of the most prominent proposals. To more clearly focus the analysis, the paper concentrates on proposals for requiring publicly traded subordinated debt, and therefore our analysis is relevant only to relatively large institutions that can feasibly issue such securities. The paper does not consider the various alternative proposals for issuing subordinated debt specifically designed for small institutions. Our analysis indicates that a subordinated debt requirement will only modestly increase the risk sensitivity of bank costs at most large banks; however, we argue that there are substantial benefits to using subordinated debt as a market-based trigger for regulatory action. While we favor a mandatory requirement to issue subordinated debt, such a requirement should not eliminate separate minimums for equity capital, as some proponents of subordinated debt suggest"--Office of the Comptroller of the Currency web site

Notes:

Title from title screen (viewed January 30, 2004).

"March 2000."

Includes bibliographical references.

Other Format:

Lang, William W. Analysis of proposals for a minimum subordinanted debt requirement

OCLC:

54357024