IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this article

La Politique de Dette Subordonnée comme alternative au IIIe Pilier de Bâle II : est-elle faisable ?

Listed author(s):
  • Adrian Pop
Registered author(s):

    Mandatory Sub-Debt Policy as an alternative to the Third Pillar of Basel II : Is it feasible ?, by Adrian Pop The recent proposals of reform put forward by the Bank for International Settlements and the Federal Reserve System include specific elements of market discipline that are naturally added to the traditional tools of banking regulation and supervision. More precisely, a mandatory Sub-Debt Policy by which certain large and sophisticated banking organizations are forced to issue some minimum amount of subordinated debt on a regular basis, can prove itself effective in mitigating moral hazard and regulatory forbearance in banking industry. In this article, we provide some interesting and useful insights into the incentives structure of sub-debt holders by using a standard framework for option pricing applied to the banking firm. In particular, under `normal' conditions of bank solvability the subordinated creditors act indeed as natural `allies' of regulators, mitigating the risk taking incentives of bank shareholders. On the contrary, as the bank approaches its default point, they may exacerbate the moral hazard problems and complicate the tasks of supervisory authorities. In this second case, the sub-debt holders behave in fact as `enemies' of the government supervisor. Finally, we derive some major policy implications in terms of market discipline and optimal bank regulation design. Journal of Economic Literature classification numbers : G21, G28.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL:
    Download Restriction: free

    File URL:
    Download Restriction: free

    Article provided by De Boeck Université in its journal Recherches économiques de Louvain.

    Volume (Year): 71 (2005)
    Issue (Month): 2 ()
    Pages: 193-222

    in new window

    Handle: RePEc:cai:reldbu:rel_712_0193
    Contact details of provider: Web page:

    No references listed on IDEAS
    You can help add them by filling out this form.

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:cai:reldbu:rel_712_0193. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jean-Baptiste de Vathaire)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.