A Theory of Bank Regulation and Management Compensation
分析银行监管的激励结构，提出通过管理层薪酬和公平的FDIC保费来更直接地控制风险转移激励，实现最优投资选择。
This paper examines the incentive structure underlying the current features of bank regulation, particularly the role of prompt corrective action, capital requirements and mandatory restrictions on asset choice as primary tools to control risk-shifting incentives of depository institutions. We propose instead a more direct and effective mechanism of influencing incentives through the role of top-management compensation, whereby a fair and revenue-neutral FDIC premium incorporates incentive features top-management compensation as well as the level of bank capitalization. With this pricing scheme (for FDIC insurance) we show that bank owners choose an optimal management compensation structure which induces first-best value-maximizing investment choices by a bank’s management. We also characterize the parameters of the optimal managerial compensation structure and the FDIC premium schedule explicitly.