Das IWH auf der ASSA-Jahrestagung 2020 in San Diego
Das IWH auf der ASSA-Jahrestagung 2020 in San Diego Die American Economic...
Reports des European Forecasting Network (EFN)
Reports des European Forecasting Network (EFN) Das European Forecasting Network...
Neues Europa Die Wirtschaftskrise ist weitgehend überwunden, doch das Vertrauen in die EZB...
Borrowers Under Water! Rare Disasters, Regional Banks, and Recovery Lending ...
International Banking Library
International Banking Library The International Banking Library (IBL) is a...
Fiscal Policy and Fiscal Fragility: Empirical Evidence from the OECD ...
Basel III Capital Requirements and Heterogeneous Banks
I develop a theoretical model to investigate the effect of simultaneous regulation with a leverage ratio and a risk-weighted ratio on banks‘ risk taking and banking market structure. I extend a portfolio choice model by adding heterogeneity in productivity among banks. Regulators face a trade-off between the efficient allocation of resources and financial stability. In an oligopolistic market, risk-weighted requirements incentivise banks with high productivity to lend to low-risk firms. When a leverage ratio is introduced, these banks lose market shares to less productive competitors and react with risk-shifting into high-risk loans. While average productivity in the low-risk market falls, market shares in the high-risk market are dispersed across new entrants with high as well as low productivity.
Effectiveness and (In)Efficiencies of Compensation Regulation: Evidence from the EU Banker Bonus Cap
We study if the regulation of bank executive compensation has unintended consequences. Based on novel data on CEO and non-CEO executives in EU banking, we show that capping the variable-to-fixed compensation ratio did not induce executives to abandon the industry. Banks indemnified executives sufficiently for the shock to retain them by raising fixed and lowering variable compensation while complying with the cap. At the same time, banks‘ risk-adjusted performance deteriorated due to increased idiosyncratic risk. Collateral damage for the financial system as a whole appears modest though, as average co-movement of banks with the market declined under the cap.