Incentive pay and bank risk-taking: Evidence from Austrian, German, and Swiss banks

• 成果类型: Article; Proceedings Paper
• 署名作者: Efing, Matthias; Hau, Harald; Kampkoetter, Patrick; Steinbrecher, Johannes
• 署名单位: University of Geneva; University of Geneva; University of Cologne; Leibniz Association; Ifo Institut
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2014.12.006
• 发表日期: 2015
• 页码: S123-S140
• 关键词: Trading income; Bank risk; Incentive pay; bonus payments

摘要

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.