How Post-Crisis Regulation Has Affected Bank CEO Compensation

58 Pages Posted: 29 Apr 2017 Last revised: 21 Dec 2018

See all articles by Vittoria Cerasi

Vittoria Cerasi

Bicocca University - Department of Economics, Management & Statistics (DEMS)

Sebastian Deininger

University of Basel

Leonardo Gambacorta

Bank for International Settlements (BIS); Centre for Economic Policy Research (CEPR)

Tommaso Oliviero

University of Naples Federico II - CSEF - Center for Studies in Economics and Finance; University of Naples Federico II - Department of Economic and Statistical Sciences; Università degli Studi di Milano-Bicocca - Center for European Studies (CefES)

Multiple version iconThere are 3 versions of this paper

Date Written: December 1, 2018

Abstract

This paper assesses whether compensation practices for bank Chief Executive Officers (CEOs) changed after the Financial Stability Board (FSB) issued post-crisis guidelines on sound compensation. Banks in jurisdictions which implemented the FSB’s Principles and Standards of Sound Compensation in national legislation changed their compensation policies more than other banks. Compensation in those jurisdictions is less linked to short-term profits and more linked to risks, with CEOs at riskier banks receiving less, by way of variable compensation, than those at less-risky peers. This was particularly true of investment banks and of banks which previously had weaker risk management, for example those that previously lacked a Chief Risk Officer.

Keywords: Banks; Managerial compensation; Prudential regulation; Risk-taking.

JEL Classification: G21, G28, G32

Suggested Citation

Cerasi, Vittoria and Deininger, Sebastian and Gambacorta, Leonardo and Oliviero, Tommaso, How Post-Crisis Regulation Has Affected Bank CEO Compensation (December 1, 2018). University of Milan Bicocca Department of Economics, Management and Statistics Working Paper No. 365. Available at SSRN: https://ssrn.com/abstract=2960191 or http://dx.doi.org/10.2139/ssrn.2960191

Vittoria Cerasi (Contact Author)

Bicocca University - Department of Economics, Management & Statistics (DEMS) ( email )

Piazza dell'Ateneo Nuovo, 1
Milan, 20126
Italy
+39-02-64485821 (Phone)
+39-02-64485878 (Fax)

Sebastian Deininger

University of Basel ( email )

Petersplatz 1
Basel, CH-4003
Switzerland

Leonardo Gambacorta

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
Basel, Basel-Stadt 4002
Switzerland

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Tommaso Oliviero

University of Naples Federico II - CSEF - Center for Studies in Economics and Finance ( email )

Via Cintia
Complesso Monte S. Angelo
Naples, Naples 80126
Italy

University of Naples Federico II - Department of Economic and Statistical Sciences ( email )

Via Cintia 26
Napoli
Italy

Università degli Studi di Milano-Bicocca - Center for European Studies (CefES) ( email )

U6 Building
Viale Piero e Alberto Pirelli, 22
Milano, 20126
Italy

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