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Subordinated debt: tough love for banks?

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  • Joseph G. Haubrich

Abstract

Several recent proposals aim to restore market discipline to the banking sector by forcing banks to issue debt that is not guaranteed by the government, termed subordinated debt. This Commentary examines the reasoning behind such proposals and assesses the likelihood of their success.

Suggested Citation

  • Joseph G. Haubrich, 1998. "Subordinated debt: tough love for banks?," Economic Commentary, Federal Reserve Bank of Cleveland, issue Dec.
  • Handle: RePEc:fip:fedcec:y:1998:i:dec
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    Cited by:

    1. Jagtiani, Julapa & Lemieux, Catharine, 2001. "Market discipline prior to bank failure," Journal of Economics and Business, Elsevier, vol. 53(2-3), pages 313-324.
    2. Bigus, Jochen & Prigge, Stefan, 2005. "When risk premiums decrease as the bank's risk increases--a caveat on the use of subordinated bonds as an instrument of banking supervision," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 15(4), pages 369-390, October.
    3. Adrian Pop, 2003. "Dette subordonnée, discipline de marché et réforme réglementaire," Revue d'Économie Financière, Programme National Persée, vol. 71(2), pages 261-276.

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    Keywords

    Bank supervision; Bank capital;

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