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Bankers' compensation: Sprint swimming in short bonus pools?

Jokivuolle, Esa; Keppo, Jussi - Suomen Pankki - 2014

The global financial crisis of 2007–2008 has given rise to new regulatory initiatives to put restrictions on the size and the term of bankers' pay. We revisit both theoretically and empirically the question of whether these regulations are justified. We model bonuses as a series of sequential...

Persistent link: https://www.econbiz.de/10010734434

Bonus caps, deferrals and bankers' risk-taking

Jokivuolle, Esa; Keppo, Jussi; Yuan, Xuchuan - Suomen Pankki - 2015

We model a banker's future bonuses as a series of call options on the bank's profits and show that bonus caps and deferrals reduce risk-taking. However, the banker's optimal risk-taking also depends on the costs of risk-taking. We calibrate the model to US banking data and show that lengthening...

Persistent link: https://www.econbiz.de/10011207862

Central counterparty clearing: constructing a framework for evaluation of risks and benefits

Ripatti, Kirsi - Suomen Pankki - 2004

A Central Counterparty (CCP) is an entity that interposes itself between transacting counterparties – a seller vis-à-vis the original buyer and a buyer vis-à-vis the original seller – to guarantee execution of the transaction. Thus, the original transacting parties substitute their...

Persistent link: https://www.econbiz.de/10005419682

The cost of sin: The effect of social norms on audit pricing

Leventis, Stergios; Hasan, Iftekhar; Dedoulis, Emmanouil - Suomen Pankki - 2013

In this paper we provide evidence for the effects of social norms on audit pricing by studying companies belonging to the alcohol, firearms, gambling, military, nuclear power, and tobacco industries, which are often described as “sin” companies. We hypothesize that the disparities between...

Persistent link: https://www.econbiz.de/10010818972

Professors in the boardroom and their impact on corporate governance and firm performance

Francis, Bill B.; Hasan, Iftekhar; Wu, Qiang - Suomen Pankki - 2014

investigates the effects of academic directors on corporate governance and firm performance. We find that companies with directors … from academia are associated with higher performance and this relation is driven by professors without administrative jobs …. Specifically, our results show that the presence of academic directors is associated with higher acquisition performance, higher …

Persistent link: https://www.econbiz.de/10010818982

Descriptive analysis of Finnish equity, bond and money market returns

Nyberg, Peter; Vaihekoski, Mika - Suomen Pankki - 2011

This paper gathers the longest available historical monthly return series for the Finnish equity, bond and money markets as well as inflation. The series are analysed to calculate the statistical characteristics of the returns investors would have received in these markets. We also survey...

Persistent link: https://www.econbiz.de/10009643485

Central bank institutional structure and effective central banking: cross-country empirical evidence

Hasan, Iftekhar; Mester, Loretta - Suomen Pankki - 2008

pointing out the potential role institutional form can play in central bank performance, little empirical work has been done to … investigate the hypothesis that institutional form is related to performance. This paper attempts to help fill this void. …

Persistent link: https://www.econbiz.de/10005648956

Which financial stocks did short sellers target in the subprime crisis?

Hasan, Iftekhar; Massoud, Nadia; Saunders, Anthony; … - Suomen Pankki - 2015

Tracing the SEC ban on the short selling of financial stocks in September 2008, this paper investigates whether such selling activity before the 2008 short ban reflected financial companies’ risk exposures in the subprime crisis. The evidence suggests that short sellers sold short stocks that...

Persistent link: https://www.econbiz.de/10011188494

Early intervention and prompt corrective action in Europe

Mayes, David G - Suomen Pankki - 2009

The present crisis has revealed that, as expected, much of the safety net for handling failures in the banking system is deficient, particularly for cross-border banks, and the present problems had to be handled by a range of ad hoc measures. The principal new measure that needs to be undertaken...

Persistent link: https://www.econbiz.de/10004976733

The feasibility of through-the-cycle ratings

Kauko, Karlo - Suomen Pankki - 2010

It has been proposed that the potential procyclicality of Basel II could be alleviated by using through-the-cycle (TTC) ratings in IRBA models. A TTC rating would be based on the structural component of the debtor’s credit risk ignoring cyclical fluctuations. This paper tests for the existence...

Persistent link: https://www.econbiz.de/10008483930