Berg, TobiasSchliephake, Eva2024-07-302024-07-302024-05-150022-2879http://hdl.handle.net/10400.14/45955We analyze the equilibria of market-triggered contingent capital if a bank’s asset value is not common knowledge. Using a global game setup with private signals, we characterize the unique equilibrium for the conversion of the market-triggered contingent capital. The conversion likelihood increases with higher bank leverage, a higher face value of contingent capital, and a greater dilution for incumbent shareholders. We further show that the existence of both a private and a public signal constrains the optimal design of contingent capital for which a unique equilibrium exists.engBanking regulationContingent capitalGlobal gamesRisk-taking incentivesjournal article10.1111/jmcb.1319085198616891001268852600001