Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments October 23, 2022 erstellt
Description:
The proposal “Convertible/Bail-inable Dividend Bonds“ aims to reduce limited liability of bank owners: We propose that part (or the whole) dividends of the banks are not paid out cash to the equity holders. The dividends of the banks are given to the supervisory authority, which issues “convertible bail-inable dividend bonds“ and gives these bonds to the equity holders. This “convertible bail-inable dividend bonds“ can be traded on the financial market. Based on the riskiness of the bank, these bonds will be traded with some disagio: The higher the riskiness of the bank, the higher will be the disagio. As soon as the „convertible bail-inable dividend bonds“ expire and the bank is not in distress, the supervisory authority“ will payout the dividend to the owner of the bond. But if the bank gets into distress, the „convertible bail-inable dividend bonds“ will trigger and used to reduce the losses of the bank’s shareholders. This paper also shows the different proposals that aim to reduce inefficient risk taking behaviour of banks