The Case for Intervening in Bankers’ Pay
研究竞争银行通过奖金而非固定工资支付员工如何增加违约风险，并提出最优监管应限制奖金占资产负债表比例，但严格上限可能适得其反。
ABSTRACT This paper studies the default risk of banks generated by investment and remuneration pressures. Competing banks prefer to pay their banking staff in bonuses and not in fixed wages as risk sharing on the remuneration bill is valuable. Competition for bankers generates a negative externality, driving up market levels of banker remuneration and hence rival banks’ default risk. Optimal financial regulation involves an appropriately structured limit on the proportion of the balance sheet used for bonuses. However, stringent bonus caps are value destroying, default risk enhancing, and suboptimal for regulators who control only a small number of banks.