-fledged Islamic banks (IBs) are indeed more stable than conventional banking institutions (CBIs), and are better capitalized than … loss provisioning. Similar results obtain for Islamic windows of mixed banks compared with conventional windows. The … analysis suggests that the loss absorption capacity of Islamic banks leads to less risk taking and a more stable banking system. …

CoCo's (contingent convertible capital) are designed to convert from debt to equity when banks need it most. Using a … on other banks in the system in the likely case of correlated asset returns, so bankruns elsewhere in the banking system …

conversion on the risk-taking behaviour of the issuing bank. We also test for regulatory arbitrage: do banks try to maintain risk …

framework for banks. Although CoCos can provide benefits, such as automatic recapitalization of troubled banks, their inherent … missing coupon payments. We provide several recommendations to improve the capital requirements regime for banks. …

. Debt overhang in banks leads to positive NPV loans being rejected; after an increase in equity, lending will increase in a … debt overhang situation. But after banks increase their equity ratio and subsequently engage less in risk shifting behavior … is dominant: when there is debt overhang in banks higher capital leads to more, not less loans and is expansionary; while …