Market discipline and subordinated debt: a review of some salient issues
Robert R. Bliss
Economic Perspectives, 2001, vol. 25, issue Q I, 24-45
Abstract:
Requiring banks to issue subordinated debt is one proposal to bring market discipline to bear in aiding regulatory supervision. This article explores the frictions that produce a need for discipline (agency problems) and the mechanisms markets have evolved for dealing with these frictions. Following an examination of the rationales and assumptions underlying subordinated debt proposals, the article concludes that the case tying regulatory intervention to subordinated debt spreads is not clear-cut, and that use of all available information, including equity returns and debt yields, when available, is more likely to achieve regulatory goals.
Keywords: Debt; bank examinations; Bank supervision (search for similar items in EconPapers)
Date: 2001
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (25)
Downloads: (external link)
http://www.chicagofed.org/digital_assets/publicati ... es/2001/1qepart2.pdf (application/pdf)
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:fip:fedhep:y:2001:i:qi:p:24-45:n:v.25no.1
Ordering information: This journal article can be ordered from
Access Statistics for this article
More articles in Economic Perspectives from Federal Reserve Bank of Chicago Contact information at EDIRC.
Bibliographic data for series maintained by Lauren Wiese ().