Economics at your fingertips  

Contingent Convertible bond literature review: making everything and nothing possible?

Philippe Oster ()
Additional contact information
Philippe Oster: Zeppelin University Friedrichshafen

Journal of Banking Regulation, 2020, vol. 21, issue 4, No 4, 343-381

Abstract: Abstract Contingent Convertible (CoCo) bonds are subject to a considerable theoretical and practical debate. This article presents a systematic literature survey from five databases between 2002 and June 30, 2018, based on a content analysis approach. I do so by analyzing the multidisciplinary linking points of 244 CoCo-related publications from 27 countries. This literature review considers—in addition to peer-reviewed journal articles—first-tier gray literature in order to receive the most comprehensive picture possible. Although CoCos that qualify for Basel III have various advantages such as less social costs due to optimal capital regulation and equilibrium leverage, lower default risk, cheaper financing and enhanced returns for issuers, they cause at least as many undesirable effects in the field of moral hazard such as the preference for higher risk-taking of management and equity holders or the acceptance of elevated asset volatility as a result of the high wealth transfer risk for CoCo holders. The explanations for the established CoCo design are multifaceted and vary greatly. In academia, caution needs to be exercised on the tendency to over-engineer the possible future design of CoCos and the myriad of outcomes.

Keywords: Contingent Convertible (CoCo) bonds; Security design; Basel III regulation; Point of Non-Viability (PoNV); Moral hazard (search for similar items in EconPapers)
JEL-codes: G01 G12 G21 G28 G32 G33 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link) Abstract (text/html)
Access to full text is restricted to subscribers.

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:

Ordering information: This journal article can be ordered from

DOI: 10.1057/s41261-019-00122-z

Access Statistics for this article

Journal of Banking Regulation is currently edited by Dalvinder Singh

More articles in Journal of Banking Regulation from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().

Page updated 2022-05-12
Handle: RePEc:pal:jbkreg:v:21:y:2020:i:4:d:10.1057_s41261-019-00122-z