CEO compensation and bank risk: is compensation in banking structured to promote risk taking?

Article Abstract:

A positive relationship between the importance of equity-based incentives and the value of the bank's charter belies the hypothesis that compensation policies in banking are designed to promote risk taking. This was gleaned from an examination of the structure and level of CEO compensation in banking and a comparison of bank CEOs' compensation with CEO compensation in other industries. On average, bank CEOs get less cash compensation, are less likely to join a stock option plan, hold fewer stock options and receive a smaller percentage of total compensation in the form of options and stock compared with CEOs in other sectors.

Analysis, Compensation and benefits, Chief executive officers, Wages, Wages and salaries

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Does the debt market assess large banks' risk? : time series evidence from money center CDs (certificate of deposits)

Article Abstract:

An analysis of debt market management related to risks of large banking firms is presented. The analysis focuses on bank riskpremium and considers time series evidence for bank rates covering the period from May 1982 to Jul 1988. The study also assumes the condition that liabilities guarantee depositors a yield for predicted losses. It is shown thatCD (certificates of deposit) rates paid by large banks carry vital default riskpremia.

Evaluation, Asset-liability management (Banking), Asset liability management (Banking), Certificates of deposit

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New evidence on returns to scale and product mix among US commercial banks

Article Abstract:

Product mix and returns to scale are examined in detail using data for US commercial banks. There has been a rise in potential economies of scale since 1985.

Economics, Research and Development in the Social Sciences and Humanities, Economies of scale

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