- Working Paper
Any solvency regime for financial institutions should be aligned with the two fundamental objectives of regulation: protecting liability holders and securing the stability of the financial system. From these objectives we derive two normative requirements for capital adequacy tests, called surplus and numéraire invariance, respectively. We characterize capital adequacy tests that satisfy surplus and numéraire invariance, establish an intimate link between these requirements, and highlight an inherent tension between the ability to meet them and the desire to give credit for diversification Show more
Journal / seriesarXiv
Organisational unit03658 - Schweizer, Martin
NotesSubmitted on 4 April 2015.
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