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http://hdl.handle.net/10419/37198
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| Title: | | Bank Bonuses and Bail-out Guarantees  |
| Authors: | | Hakenes, Hendrik Schnabel, Isabel |
| Issue Date: | | 2010 |
| Series/Report no.: | | Beiträge zur Jahrestagung des Vereins für Socialpolitik 2010: Ökonomie der Familie - Session: Causes and Consequences of Bank Bail-Outs D7-V2 |
| Abstract: | | This paper analyzes how a bank shareholder optimally designs the compensation scheme of a bank manager if there are agency problems between the shareholder and the manager, and how this design changes in reaction to anticipated bail-outs. If there is a problem of excessive risk-taking, bail-out guarantees lead to steeper compensation schemes and even more risk-taking. If there is an effort problem, the compensation scheme becomes flatter and effort decreases. If both types of agency problems are present, a sufficiently large increase in bail-out perceptions will make it optimal for a welfare-maximizing regulator to impose ceilings on bank bonuses. |
| Subjects: | | Bonus payments bail-out guarantees bank manager compensation |
| JEL: | | G21 G28 M52 |
| Document Type: | | Conference Paper |
| Appears in Collections: | | Jahrestagung des Vereins für Socialpolitik 2010 (Kiel): Ökonomie der Familie
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