Title: Effects of Legal Minimal Capital Requirement on the Market Discipline of Subordinated Debts
Abstract: In traditional opinion,the legal minimal capital requirement can increase the incentive of market discipline of subordinated debts creditors.But our study shows that the minimal capital requirement may conduces banks to have the ability to pay creditors but they don't want to pay.It maybe overly increases the risk exposure of creditors and accordingly boosts up the probability that creditors put up with the bigger risk-taking behavior of banks.Therefore,the authorities should prudently bring the overly protection policies for banking into effect.
Publication Year: 2009
Publication Date: 2009-01-01
Language: en
Type: article
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