Essays on Banking and Finance
A safe and healthy banking system is a central pillar of financial stability and even political stability. Systemic banking crises lead to political instability and extremism while the same cannot be said of macroeconomic downturns unrelated to banking crises (see e.g. Funke, Schularick, and Trebesch, 2016). Several factors have been identified as potential culprits for the recent financial crisis, among them insufficient bank liquidity, insufficient bank capitalization, risk-taking incentives induced by compensation struc- tures, and moral hazard emanating from government safety nets. My dissertation aims to enhance our understanding of two of these factors: capitalization and compensation, or put differently, (equity) capital and human capital.
