The Extent to which Contingent Convertible Leasing Protects Bank Deposits:A Barrier Option Approach

Khadimallah Asma () and Abid Fathi ()
Additional contact information
Khadimallah Asma: Faculty of Economic and Management Sciences, Probability and Statistics Laboratory, University of Sfax, Sfax, Tunisia
Abid Fathi: Faculty of Economic and Management Sciences, Probability and Statistics Laboratory, University of Sfax, Sfax, Tunisia

China Finance and Economic Review, 2025, vol. 14, issue 1, 113-129

Abstract: This paper proposes an alternative solution to the problem related to the risk that banks incur in the protection of deposits. This solution lies in the use by banks of contingent convertible leasing contracts to face financial distress situations by solidifying their own funds and thus improving the quality of deposit protection. Convertible contingent leases are instruments that are automatically convertible into shares when the bank reaches a level of financial distress. They allow a limited bailout of the bank in times of generalized crisis when they are not able to issue sufficient levels of new equity.

Keywords: banking; convertible contingent leases; default probability; barrier option; capital structure (search for similar items in EconPapers)
Date: 2025
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1515/cfer-2025-0006 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bpj:cferev:v:14:y:2025:i:1:p:113-129:n:1006

DOI: 10.1515/cfer-2025-0006

Access Statistics for this article

China Finance and Economic Review is currently edited by He Dexu

More articles in China Finance and Economic Review from De Gruyter
Bibliographic data for series maintained by Peter Golla ().