Aufsätze Ökonomik

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Prof. Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.

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Creditors, subordinated (junior creditors)

Subordinated liabilities include all debts that, in the event of insolvency, will only be serviced after all creditors have been satisfied. – In principle, there is a special incentive for risk monitoring of a bank by the creditors of subordinated liabilities. This is because, unlike bank shareholders, they have only a limited share in profit increases, but unlike other creditors they participate fully in the risk of an institution. In times of crisis for a bank, however, subordinated creditors lose their interest in limiting risk; for their position in the event of insolvency approaches that of the owners. – See Bank Shareholder Interest, Size Confidence, Securitization. – Cf. Deutsche Bundesbank Monthly Report of October 2005, pp. 75 ff. (p. 87: Overview of the issuance of subordinated debt by German banks).

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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