The Wolves of Wall Street: Managerial Attributes and Bank Business Models

58 Pages Posted: 8 Oct 2015 Last revised: 30 Aug 2018

Jens Hagendorff

University of Edinburgh - Business School

Anthony Saunders

New York University - Leonard N. Stern School of Business

Sascha Steffen

Frankfurt School of Finance & Management

Francesco Vallascas

University of Leeds - Division of Accounting and Finance

Date Written: August 17, 2018

Abstract

We show that compensation and other manager characteristics that attract public scrutiny in the banking industry only describe a small amount of the heterogeneity in the business models of banks. Instead, idiosyncratic manager effects that cannot be explained by observable manager characteristics explain substantial differences in bank policies and risk. Therefore, most of the variation in the idiosyncratic effects that managers exert on banks is rooted in manager characteristics whose economic origins are unobservable. This implies attempts to rein in bank risk-taking by targeting manager-specific characteristics will be extremely challenging.

Keywords: Banks, managerial style, corporate governance, risk

JEL Classification: G21, G32, G34

Suggested Citation

Hagendorff, Jens and Saunders, Anthony and Steffen, Sascha and Vallascas, Francesco, The Wolves of Wall Street: Managerial Attributes and Bank Business Models (August 17, 2018). Available at SSRN: https://ssrn.com/abstract=2670525 or http://dx.doi.org/10.2139/ssrn.2670525

Jens Hagendorff (Contact Author)

University of Edinburgh - Business School ( email )

University of Edinburgh
29 Buccleuch Place
Edinburgh, Scotland EH8 9JS
UNITED KINGDOM

Anthony Saunders

New York University - Leonard N. Stern School of Business ( email )

44 West 4th Street
9-190, MEC
New York, NY 10012-1126
United States
212-998-0711 (Phone)
212-995-4220 (Fax)

Sascha Steffen

Frankfurt School of Finance & Management ( email )

Sonnemannstr. 9 -11
Frankfurt, 60314
Germany

HOME PAGE: http://www.sascha-steffen.de

Francesco Vallascas

University of Leeds - Division of Accounting and Finance ( email )

Leeds LS2 9JT
United Kingdom

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