Is Stricter Regulation of Incentive Compensation the Missing Piece?

36 Pages Posted: 3 Apr 2019 Last revised: 29 Apr 2020

See all articles by Larry D. Wall

Larry D. Wall

Federal Reserve Bank of Atlanta - Research Department

Date Written: 2019-03-01

Abstract

Although a number of steps have been taken to reduce the risk of financial stability, some significant weaknesses remain. This paper examines whether stricter regulation of incentive compensation is the missing piece needed to reduce risk to acceptable levels. Unfortunately, this review of the literatures on the relationship of risk to bank chief operating officer and bank employee compensation suggest both have some potential but that significant concerns remain in both cases. At this point, we cannot confidently say that compensation regulation is the missing piece.

Keywords: incentive compensation, bank regulation

JEL Classification: G01, G21, G28

Suggested Citation

Wall, Larry D., Is Stricter Regulation of Incentive Compensation the Missing Piece? (2019-03-01). Available at SSRN: https://ssrn.com/abstract=3363182 or http://dx.doi.org/10.29338/wp2019-06

Larry D. Wall (Contact Author)

Federal Reserve Bank of Atlanta - Research Department ( email )

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