Bank executive compensation and risk-taking

Gaston Gelos, Bertrand Rime and Kevin Tracol

BIS Quarterly Review, 2026

Abstract: This article investigates the evolution of bank compensation practices since the Great Financial Crisis (GFC) and how it relates to bank risk. Despite the lessons learned from the GFC, performance metrics for bank executives generally do not account for risk. EU regulation requiring banks to extend their deferral horizons has reduced risk-taking. By contrast, our evidence is not conclusive regarding restrictions on the share of variable compensation. A case study of the 2023 banking turmoil indicates that bank governance failed to ensure that compensation schemes accounted for risk-taking, to recognise the deterioration of performance and to adjust compensation accordingly.

JEL-codes: G21 G28 J33 (search for similar items in EconPapers)
Date: 2026
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.bis.org/publications/qr-202609/bank-ex ... -and-risk-taking.pdf (application/pdf)
https://www.bis.org/publications/qr-202609/bank-ex ... tion-and-risk-taking (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bis:bisqtr:2609c

Access Statistics for this article

BIS Quarterly Review is currently edited by Christian Upper

More articles in BIS Quarterly Review from Bank for International Settlements Contact information at EDIRC.
Bibliographic data for series maintained by Martin Fessler ().