Ludolph, Melina2025-05-302022kxp: 1786447932https://epflicht.bibliothek.uni-halle.de/handle/123456789/107751786447932urn:nbn:de:gbv:3:2-1454753162160This paper examines the impact of issuing contingent convertible (CoCo) bonds on bank risk. I apply a matching-based difference-in-differences approach to banklevel data for 246 publicly traded European banks and 61 CoCo issues from 2008−2018. My estimation results reveal that issuing CoCo bonds that meet the criteria for additional tier 1 (AT1) capital results in significantly higher z-scores one to three years after the issuance. Rather than having a net negative impact, issuing CoCos seems to impede a positive time trend towards greater bank stability. This study adds to the empirical literature on the risk-effect of contingent convertibles by identifying the causal effect of AT1 CoCo bonds on reported risk changes over a three-year post-treatment horizon based on a comprehensive sample of European banks. The results confirm theoretical predictions that currently outstanding CoCo bonds create incentives for excessive risk-taking.1 Online-Ressource (III, 50 Seiten, 1,35 MB) : Diagrammeenghttp://rightsstatements.org/vocab/InC/1.0/AT1 capitalbank riskBasel IIICoCo bonds330Book