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Mandatory Subordinated Debt and the Corporate Governance of Banks

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  • Paul Hamalainen

    (The Business School, Loughborough University, Loughborough, UK)

Abstract

Given current debates on the future direction of bank regulatory design, the objective of this paper is to raise awareness of a new and potentially significant tool in the corporate governance of banks. Public policy proposals to improve the nature of bank regulation through private-sector solutions and, in particular, mandatory subordinated debt market discipline provide such an opportunity. This paper argues that apart from creating an additional class of bank stakeholder whose interests align with the risk-reduction objectives of the regulatory authorities, a suitable mandatory subordinated debt policy (MSDP) could also provide a new and meaningful "voice" in the corporate governance of banks. Copyright Blackwell Publishing Ltd. 2004.

Suggested Citation

  • Paul Hamalainen, 2004. "Mandatory Subordinated Debt and the Corporate Governance of Banks," Corporate Governance: An International Review, Wiley Blackwell, vol. 12(1), pages 93-106, January.
  • Handle: RePEc:bla:corgov:v:12:y:2004:i:1:p:93-106
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    References listed on IDEAS

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    1. Demirguc-Kunt, Asl1 & Huizinga, Harry, 1999. "Market discipline and financial safety net design," Policy Research Working Paper Series 2183, The World Bank.
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    Cited by:

    1. Dalla Pellegrina, Lucia & Saraceno, Margherita, 2011. "Securities class actions in the US banking sector: Between investor protection and bank stability," Journal of Financial Stability, Elsevier, vol. 7(4), pages 215-227, December.
    2. Fotios Pasiouras & Chrysovalantis Gaganis & Constantin Zopounidis, 2008. "Regulations, Supervision Approaches and Acquisition Likelihood in the Asian Banking Industry," Asia-Pacific Financial Markets, Springer;Japanese Association of Financial Economics and Engineering, vol. 15(2), pages 135-154, June.
    3. Distinguin, Isabelle & Kouassi, Tchudjane & Tarazi, Amine, 2013. "Interbank deposits and market discipline: Evidence from Central and Eastern Europe," Journal of Comparative Economics, Elsevier, vol. 41(2), pages 544-560.
    4. Agoraki, Maria-Eleni K. & Delis, Manthos D. & Pasiouras, Fotios, 2011. "Regulations, competition and bank risk-taking in transition countries," Journal of Financial Stability, Elsevier, vol. 7(1), pages 38-48, January.
    5. Polo, Andrea, 2007. "Corporate governance of banks: the current state of the debate," MPRA Paper 2325, University Library of Munich, Germany.
    6. Karima Bouaiss & Catherine Refait-Alexandre & Hervé Alexandre, 2017. "Will Bank Transparency really Help Financial Markets and Regulators?," Working Papers hal-01637917, HAL.
    7. Menz, Klaus-Michael, 2010. "Market discipline and the evaluation of Euro financial bonds--An empirical analysis," Research in International Business and Finance, Elsevier, vol. 24(3), pages 315-328, September.
    8. repec:dau:papers:123456789/4060 is not listed on IDEAS
    9. Paul Hamalainen & Barry Howcroft & Maximilian Hall, 2010. "Should A Mandatory Subordinated Debt Policy Be Introduced In The United Kingdom? Evidence From The Issuance Activity Of Banks And Building Societies," Contemporary Economic Policy, Western Economic Association International, vol. 28(2), pages 240-263, April.
    10. Ioannidis, Christos & Pasiouras, Fotios & Zopounidis, Constantin, 2010. "Assessing bank soundness with classification techniques," Omega, Elsevier, vol. 38(5), pages 345-357, October.
    11. Hess, Kurt & Feng, Gary, 2007. "Is there market discipline for New Zealand non-bank financial institutions?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 17(4), pages 326-340, October.

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