Efing, Matthias, Hau, Harald, Kampkoetter, Patrick and Steinbrecher, Johannes (2015). Incentive pay and bank risk-taking: Evidence from Austrian, German, and Swiss banks. J. Int. Econ., 96. S. S123 - 18. AMSTERDAM: ELSEVIER SCIENCE BV. ISSN 1873-0353
Full text not available from this repository.Abstract
We use payroll data in the Austrian, German, and Swiss banking sector to identify incentive pay in the critical banking segments of treasury/capital market management and investment banking for 67 banks. We document an economically significant correlation of incentive pay with both the level and volatility of bank trading income particularly for the pre-crisis period 2003-2007, in which incentive pay was strongest. This result is robust if we instrument the bonus share in the capital market divisions with the strength of incentive pay in unrelated bank divisions like retail banking. Moreover, pre-crisis incentive pay appears too strong for an optimal trade-off between trading income and risk, which maximizes the net present value of trading income. Further analyses indicate that the bonus moderation during the crisis has removed excessive pre-crisis incentive pay. (C) 2015 Elsevier B.V. All rights reserved.
| Item Type: | Journal Article | ||||||||||||||||||||
| Creators: |
|
||||||||||||||||||||
| URN: | urn:nbn:de:hbz:38-399557 | ||||||||||||||||||||
| DOI: | 10.1016/j.jinteco.2014.12.006 | ||||||||||||||||||||
| Journal or Publication Title: | J. Int. Econ. | ||||||||||||||||||||
| Volume: | 96 | ||||||||||||||||||||
| Page Range: | S. S123 - 18 | ||||||||||||||||||||
| Date: | 2015 | ||||||||||||||||||||
| Publisher: | ELSEVIER SCIENCE BV | ||||||||||||||||||||
| Place of Publication: | AMSTERDAM | ||||||||||||||||||||
| ISSN: | 1873-0353 | ||||||||||||||||||||
| Language: | English | ||||||||||||||||||||
| Faculty: | Unspecified | ||||||||||||||||||||
| Divisions: | Unspecified | ||||||||||||||||||||
| Subjects: | no entry | ||||||||||||||||||||
| Uncontrolled Keywords: |
|
||||||||||||||||||||
| URI: | http://kups.ub.uni-koeln.de/id/eprint/39955 |
Downloads
Downloads per month over past year
Altmetric
Export
Actions (login required)
 |
View Item |