The Library
Bank pay caps, bank risk, and macroprudential regulation
Tools
Tools
Tools
Thanassoulis, John (2014) Bank pay caps, bank risk, and macroprudential regulation. Journal of Banking & Finance, Volume 48 . pp. 139-151. doi:10.1016/j.jbankfin.2014.04.004
|
PDF
WRAP_1273263-wbs-150415-paycapdec2013.pdf - Accepted Version - Requires a PDF viewer. Download (683Kb) | Preview |
Official URL: http://dx.doi.org/10.1016/j.jbankfin.2014.04.004
Abstract
This paper studies the consequences of a regulatory pay cap in proportion to assets on bank risk, bank value, and bank asset allocations. The cap is shown to lower banks’ risk and raise banks’ values by acting against a competitive externality in the labour market. The risk reduction is achieved without the possibility of reduced lending from a Tier 1 increase. The cap encourages diversification and reduces the need a bank has to focus on a limited number of asset classes. The cap can be used for Macroprudential Regulation to encourage banks to move resources away from wholesale banking to the retail banking sector. Such an intervention would be targeted: in 2009 a 20% reduction in remuneration would have been equivalent to more than 150 basis points of extra Tier 1 for UBS, for example.
| Item Type: | Journal Article | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Subjects: | H Social Sciences > HG Finance | ||||||||||
| Divisions: | Faculty of Social Sciences > Warwick Business School > Finance Group Faculty of Social Sciences > Warwick Business School |
||||||||||
| Library of Congress Subject Headings (LCSH): | Banks and banking -- Law and legislation, Bankers, Income, Bonuses (Employee fringe benefits) | ||||||||||
| Journal or Publication Title: | Journal of Banking & Finance | ||||||||||
| Publisher: | Elsevier Science BV | ||||||||||
| ISSN: | 0378-4266 | ||||||||||
| Official Date: | November 2014 | ||||||||||
| Dates: |
|
||||||||||
| Date of first compliant deposit: | 29 December 2015 | ||||||||||
| Volume: | Volume 48 | ||||||||||
| Page Range: | pp. 139-151 | ||||||||||
| DOI: | 10.1016/j.jbankfin.2014.04.004 | ||||||||||
| Status: | Peer Reviewed | ||||||||||
| Publication Status: | Published | ||||||||||
| Access rights to Published version: | Restricted or Subscription Access |
Request changes or add full text files to a record
Repository staff actions (login required)
 |
View Item |
Downloads
Downloads per month over past year
