CoCo bonds, bank stability, and earnings opacity / Melina Ludolph ; editor: Halle Institute for Economic Research (IWH) - Member of the Leibniz Association
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Discovery
1907065555
URN
urn:nbn:de:gbv:3:2-1102056
DOI
ISBN
ISSN
Autorin / Autor
Beiträger
Körperschaft
Erschienen
Halle (Saale), Germany : Halle Institute for Economic Research (IWH) - Member of the Leibniz Association, [2024?]
Umfang
1 Online-Ressource (III, 74 Seiten, 2,37 MB) : Diagramme
Ausgabevermerk
This version: September 3, 2024
Sprache
eng
Anmerkungen
Literaturverzeichnis: Seite 42-48
Inhaltliche Zusammenfassung
This paper examines the effect of CoCo bonds that qualify as additional tier 1 capital on bank stability and reporting. The results reveal a significant reduction in the distance to insolvency following the hybrid bond issuance due to increased earnings volatility. Banks report less stable net income due to more volatile loss provisions, which increases earnings opacity rather than reflects changes in asset quality. The findings are consistent with the premise that persistent uncertainty and misconceptions among investors about bail-in likelihoods limit their monitoring engagement, which results in banks becoming less transparent.
Schriftenreihe
IWH-Diskussionspapiere ; 2022, no. 1 (January 2022) [rev.] ppn:837399270