Journalartikel

Jahr der Veröffentlichung: 2013

Seiten: 653-690

Zeitschrift: Review of Finance

Bandnummer: 17

Heftnummer: 2

ISSN: 1572-3097

eISSN: 1573-692X

DOI Link: https://doi.org/10.1093/rof/rfs002

Verlag: Oxford University Press

Abstract: 
Remuneration systems in the banking industry, in particular bonus payments, have frequently been blamed for contributing to the buildup of risks leading to the recent financial crisis. In our model, banks compete for managerial talent that is private information. Competition for talent sets incentives to offer bonuses inducing risk-taking that is excessive not only from society's perspective but also from the viewpoint of the banks themselves. In fact, bonus payments and excessive risk-taking are increasing with competition. Thus, our model offers a rationale why bonuses are paid even when reducing the expected profits of banks.

Harvard-Zitierstil: Bannier, C., Feess, E. and Packham, N. (2013) Competition, Bonuses, and Risk-taking in the Banking Industry, Review of Finance, 17(2), pp. 653-690. https://doi.org/10.1093/rof/rfs002

APA-Zitierstil: Bannier, C., Feess, E., & Packham, N. (2013). Competition, Bonuses, and Risk-taking in the Banking Industry. Review of Finance. 17(2), 653-690. https://doi.org/10.1093/rof/rfs002