بدهی های فرعی، نظم و انضباط بازار و ریسک پذیری بانک ها

The present paper demonstrates the ambiguous impact of subordinated debt on the risk-taking incentives of banks. It is shown that in comparison with full deposit insurance, subordinated debt reduces risk only if banks can credibly commit to a given level of risk. If, however, banks are not able to commit, subordinated debt leads to an increase in risk. This is because due to limited liability banks always have an incentive to increase their risk after the interest rate is contracted in order to reduce the expected costs of debt. Rational debt holders anticipate this behavior and accordingly require a higher risk premium ex ante. The higher interest rates in turn further aggravate the excessive risk-taking incentives of banks.

The recurring and severe banking crises during the last two decades made evident the high costs of extensive safety nets for banks. These costs comprise the substantial costs to taxpayers as well as the costs in terms of moral hazard and other market distortions created by the presence of the various safety nets.1 Recognizing these facts, many economists and practitioners have begun to search for ways to reduce the costs of the safety nets. The common consensus that has emerged from this search is that market discipline should be given a more prominent role.2 The most popular proposals to improve market discipline and to reduce the costs of safety nets would require banks to issue a minimal amount of subordinated, uninsured debt.3

The present paper demonstrates the ambiguous impact of subordinated debt on banks' risk-taking incentives. In particular, the contribution of this article is to highlight the limitations of the attempt to delegate more responsibility for disciplining banks to the market. Simply requiring banks to hold a minimum amount of subordinated debt may not prevent banks from incurring inefficiently high risks, but rather may induce banks to choose even higher risks than without any market discipline. This conclusion raises doubts about the effectiveness of subordinated debt proposals, and especially those that focus on direct market discipline.21 Concerning indirect market discipline, it is undisputed that the information contained in market prices are a useful indicator for bank supervisors. However, it is questionable whether the net benefit of obtaining that information by forcing banks to issue subordinated debt is positive, because the additional information may come at the cost of higher risks in banking. Furthermore, the informational content of subordinated debt should not be overestimated since the same information about banks' underlying riskiness can also be inferred from equity prices.22