Template-type: ReDIF-Paper 1.0  
Author-Name: Victor Echevarria-Icaza
Author-Email: victoreicaza@yahoo.com
Author-Workplace-Name: Instituto Complutense de Estudios Internacionales (ICEI). Universidad Complutense de Madrid.
Author-Name: Simón Sosvilla-Rivero
Author-Email: sosvilla@ccee.ucm.es
Author-Workplace-Name: Instituto Complutense de Estudios Internacionales (ICEI). Universidad Complutense de Madrid.
Title: Systemic banks, capital composition and CoCo bonds issuance: The effects on bank risk
Abstract: This paper shows that systemic banks are prone to increase their regulatory capital ratio through a decline in risk-weighted assets 
	density and an intense use of lower level capital. The market access of systemic banks, and the fact that they were singled out for 
	higher capital requirements seem to have biased them towards lower level capital, consistent with the theory that asymmetric 
	information drives capital decisions. These effects are particularly strong for institutions that had a rather low level of 
	capitalization at the start of the period and for those that exhibited a strong use of Additional Tier I capital before the regulatory 
	changes. Strict capital composition requirements for firms with lower buffers would be an improvement.
Keywords:
 Contingent capital; Banking regulation; Risk-taking incentives; Asset substitution; Systemic risk.
Creation-Date: 2017
Length: 32 pages
Number: 1706
X-File-Ref: http://america.sim.ucm.es/repec/ucm/ref/wpaper17-06.txt
File-URL: https://eprints.ucm.es/id/eprint/42841/1/WP06-17.pdf
File-Format: Application/pdf
File-Function: Full text
Handle: RePEc:ucm:wpaper:1706