Contingent Convertible bond literature review: making everything and nothing possible?

  • Philippe OsterEmail author
Original Article


Contingent Convertible (CoCo) bonds are subject to a considerable theoretical and practical debate. This article presents a systematic literature survey from five databases between 2002 and June 30, 2018, based on a content analysis approach. I do so by analyzing the multidisciplinary linking points of 244 CoCo-related publications from 27 countries. This literature review considers—in addition to peer-reviewed journal articles—first-tier gray literature in order to receive the most comprehensive picture possible. Although CoCos that qualify for Basel III have various advantages such as less social costs due to optimal capital regulation and equilibrium leverage, lower default risk, cheaper financing and enhanced returns for issuers, they cause at least as many undesirable effects in the field of moral hazard such as the preference for higher risk-taking of management and equity holders or the acceptance of elevated asset volatility as a result of the high wealth transfer risk for CoCo holders. The explanations for the established CoCo design are multifaceted and vary greatly. In academia, caution needs to be exercised on the tendency to over-engineer the possible future design of CoCos and the myriad of outcomes.


Contingent Convertible (CoCo) bonds Security design Basel III regulation Point of Non-Viability (PoNV) Moral hazard 

JEL Classification

G01 G12 G21 G28 G32 G33 



This publication is written as a part of the Doctor of Philosophy study at the Zeppelin University Friedrichshafen. The author gratefully acknowledges the financial support from the Lucerne University of Applied Sciences and Arts.

Compliance with ethical standards

Conflict of interest

The author declares that there is no conflict of interest.


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© Springer Nature Limited 2019

Authors and Affiliations

  1. 1.Chair of Empirical Finance and EconometricsZeppelin University FriedrichshafenFriedrichshafenGermany

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