Our speaker will be Tanja Brieden (Stockholm School of Economics).

She will give a talk on “Anything but Equity - On banks’ preference for hybrid debt”.
 

Abstract: Banks can fulfil part of their Basel III regulatory requirements with  Additional Tier 1 (AT1) capital. Hybrid instruments such as Contingent  Convertible Bonds (CoCos) are - under certain conditions - eligible as  AT1 capital while being inherently different from equity. Banks can  issue CoCos with very low conversion or write-down probabilities to  fulfil part of their regulatory requirements. I predict that banks that  hold CoCos with the lowest conversion or write-down probability are  systemically riskier, engage more in earnings management and have lower  Tier 1 capital levels excluding CoCo issuance amounts than banks that  fulfill their regulatory requirements with other instruments. I find  support for these hypotheses using a binary logit model and CoCo  issuances from the European Economic Area between 2009 and 2021.
 

The talk will take place on December 20, 2022 hybrid at 1 pm in room D3.0.222.

A direct link to the stream will be posted on our website.