How Post-Crisis Regulation Has Affected Bank CEO Compensation

47 Pages Posted: 29 Apr 2017

See all articles by Vittoria Cerasi

Vittoria Cerasi

Università degli Studi di Milano-Bicocca - Department of Economics, Management and 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 - Centre for Studies in Economics and Finance (CSEF)

Multiple version iconThere are 3 versions of this paper

Date Written: April 2017

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 (April 2017). BIS Working Paper No. 630, Available at SSRN: https://ssrn.com/abstract=2958191

Vittoria Cerasi (Contact Author)

Università degli Studi di Milano-Bicocca - Department of Economics, Management and 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 - Centre for Studies in Economics and Finance (CSEF) ( email )

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

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