Contingent Convertible Bonds And Public Policy: A New Approach

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2012-05-14

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Abstract

I investigate financial instruments called contingent convertible bonds (CoCos). CoCos are designed to recapitalize banks during financial crises. Regulation would mandate their issuance. I survey the structure of financial crises and develop a rationale for the instruments, then propose a specific set of characteristics for the bonds. Given those characteristics, I develop a pricing model and explore some implications of a regulatory mandate for their issuance. I conclude by rejecting them as a policy alternative.

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Pearkes, George (2012). Contingent Convertible Bonds And Public Policy: A New Approach. Honors thesis, Duke University. Retrieved from https://hdl.handle.net/10161/5390.


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