TY  - RPRT
A1  - Eufinger, Christian
A1  - Gill, Andrej
T1  - Basel III and CEO compensation in banks: a new regulatory attempt after the crisis : [March 27, 2012]
N2  - The paper analyzes the mutual influence of the capital structure and the investment decision of a bank, as well as the incentive effects of the bank executives compensation schemes on these decisions. In case the government implicitly or explicitly insures deposits and/or the banks debt, banks are incentivized to invest in risky assets and to have a high leverage. Capital regulation could potentially solve this excessive risk taking problem. However, this is only possible if the regulator can observe and properly measure the investment risks of the bank, which was called into question during the 2008-09 financial crisis. Hence, we propose a regulatory approach that is also able to implement the first best risk taking levels by the bank, but does not require the regulator to know the investment risk of the bank. The regulatory approach involves the implementation of capital requirements, which are made contingent on the management compensation.
KW  - Basel III
KW  - capital regulation
KW  - compensation
KW  - leverage
KW  - risk
Y1  - 2012
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/34369
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-343694
UR  - http://www.touteconomie.org/conference/index.php/afse/aim/paper/view/546/238
IS  - March 27, 2012
ER  -