The purpose of this paper is to understand the incentive effects of existing compensation mechanisms in case of the bankruptcy of a financial institution. The paper uses insights of law and economics to predict the effects of compensation mechanisms on the incentives of depositors, financial...

The rising tide of cross border acquisitions give rise to associated risks, which, at the very worst, include the spectre of an insolvent non-resident parent or subsidiary company. This paper describes an attempt made by the UNCITRAL to provide for a uniform standard of provisions relating to...

The failure of financial institutions is often depicted as an externally-driven event in which certain triggers almost inevitably lead to the collapse of the firm. In contrast, this paper views institutional failure as a multistage process in which precautionary measures taken by the firm can...

The rapid growth of the securitization market was a primary factor in the 2008 global financial crisis. This article explores the emergence and explosive growth of asset securitization in the period leading up to the recent crisis. Understanding this basic and pressing issue is vital for future...

For a large sample of 48 countries, we find robust evidence that strong creditor rights are associated with low long-term leverage across countries. We further find that strong creditor protection lowers long-term debt issuance, the extent to which investments are financed with long-term debt,...

The financial crisis of 2007 sparked intensive debates on its origins. The Turner Review, published on 18 March 2009, firmly places securitisation at its heart. However, even the critics admit that this type of transaction is viewed as “socially desirable”. The paper explicitly shows how the...

In this Chapter, we briefly survey the common law's adventures with creditor protection over the course of American history with a special focus on Delaware, the most important jurisdiction for corporate law. We examine the evolution of the equitable doctrines that judges have used to answer a...

Under the Basel capital rules for internationally active banks, subordinated debt has always been permitted to contribute a part of the bank's regulatory capital requirements. This is a surprising concession to banks, at first sight, since debt, as a liability, cannot contribute to equity (ie...

Banks are regarded as special institutions, and regulated and supervised heavily than other institutions. However, regulation and supervision cannot achieve zero failure regimes. Banks fail like any other commercial entities, and will continue to fail. Failure of a bank may trigger formal...