Pay transparency, bank and non-bank employment, and loan performance

Piotr Danisewicz and Steven Ongena
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Piotr Danisewicz: Tilburg University - Department of Finance

No 24-41, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: How does pay transparency affect the granting of credit by loan officers? We answer this question by studying the impact of the introduction of pay transparency laws across nine U.S. states with both individualand bank level data. Pay transparency laws spur bank employees, in particular loan officers, to leave for non-banks. Wages are traditionally higher there, and banks respond to these additional employee departures by increasing their own employee compensation. This catch-up in bank wages and the potential new hiring of employees then ostensibly leads to more bank risk-taking and lower bank loan performance.

Keywords: Pay transparency; wage increases; financial institutions; loan performance (search for similar items in EconPapers)
JEL-codes: G01 G21 G23 J31 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2024-08
New Economics Papers: this item is included in nep-hrm, nep-lma and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:chf:rpseri:rp2441

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