This paper studies the contracting problem between banks and their bankers, embedded in a competitive labour market for banker talent.  To motivate effort banks must use some variable remuneration.  Such remuneration introduces a risk-shifting problem by creating incentives to inflate early...

This study outlines a new theory linking industrial structure to optimal employment contracts and value reducing risk taking.  Firms hire their executives using optimal contracts derived within a competitive labour market.  To motivate effort firms must use some variable remuneration.  Such...

This paper studies banker remuneration in a competitive market for banker talent.  I model, and then calibrate, the default risk of the banks generated by investments and remuneration pressures.  Competing banks prefer to pay their banking staff in bonuses and not in wages as risk sharing on...