Moral Hazard Under the Salary Incentive System of Bank Executives

An Empirical Analysis Based on the Bank’s Non-performing Loan Rate and Executive Salaries

DOI

10.2991/aebmr.k.220306.045How to use a DOI?

Keywords

Bank executives; Salary level; Credit risk; Moral hazard

Abstract

The imperfect salary incentive system for bank executives is difficult to suppress the moral risk of the bank’s high-level pipeline, which further leads to the weakening of the bank’s credit risk management ability and easy to induce systemic risks. This paper selects the non-performing loan (NPL) rate of 20 banks from 2016 to 2019 as an indicator of the bank’s credit risk management capability, studies its relationship with the bank’s executive salary, and explores the moral hazard problem under the current bank executive salary incentive system. Two hypotheses are established for the relationship between the NPL rate and executive salaries, one is a positive correlation, and the other is an inverted U-shaped relationship. After regression analysis, it is found that the positive correlation between the NPL rate and executive salaries is more reasonable. This shows that even after strengthening the supervision of banks, the problem of moral hazard in the management of bank executives caused by the imperfect salary incentive system for bank executives remains exists.

Copyright

© 2022 The Authors. Published by Atlantis Press International B.V.

Open Access

This is an open access article under the CC BY-NC license.

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TY  - CONF
AU  - Yuxin Zhang
PY  - 2022
DA  - 2022/03/17
TI  - Moral Hazard Under the Salary Incentive System of Bank Executives
BT  - Proceedings of the 7th International Conference on Economy, Management, Law and Education (EMLE 2021)
PB  - Atlantis Press
SP  - 310
EP  - 318
SN  - 2352-5428
UR  - https://doi.org/10.2991/aebmr.k.220306.045
DO  - 10.2991/aebmr.k.220306.045
ID  - Zhang2022
ER  -