Several recent studies have recommended greater reliance on subordinated debt as a tool to discipline bank risk taking …. Some of these proposals recommend using sub-debt yield spreads as triggers for supervisory discipline under prompt … analysis of the relative accuracy of various capital ratios and sub-debt spreads in predicting bank condition, measured as …

of risk imposed by holders of bank liabilities; (5) a review of some of the existing sub-debt proposals emphasizing their …In recent years there has been a growing realization that there are significant problems with the current bank risk … growing realization that bank regulation must more effectively incorporate market discipline to encourage prudent risk …

Industry observes have proposed increasing the role of subordinated debt in bank capital requirements as a means to …, the authors take the next step and offer a specific sub-debt proposal. They describe how it would operate and what changes …

Although bank capital regulation permits a bank to choose freely between equity and subordinated debt to meet capital … requirements, lenders and investors view debt and equity as imperfect substitutes. It follows that the mix of debt in regulatory … Insurance Corporation Improvement Act of 1991 (FDICIA) reduced the ability of the FDIC to absorb losses of subordinated debt …

of risk imposed by holders of bank liabilities; (5) a review of some of the existing sub-debt proposals emphasizing their …In recent years there has been a growing realization that there are significant problems with the current bank risk … growing realization that bank regulation must more effectively incorporate market discipline to encourage prudent risk …

Recently there have been a number of recommendations to increase the role of subordinated debt (SND) in satisfying bank … capital requirements as a preferred means to discipline the risk-taking behavior of systemically important banks. One such …