Acharya, Viral V.; Mehran, Hamid; Schuermann, Til; … - 2011
, but also create perverse incentives for banks to engage in correlated asset choices and to hold little equity capital. As … a way to cope with these distorted incentives, we outline a two-tier capital framework for banks. The first tier is a … regular core capital requirement that helps deter excessive risk-taking incentives. The second tier, a novel aspect of our …
