Involuntary excess reserve and bankers’ remuneration: evidence from Chinese banks

Thai Nguyen, Agyenim Boateng and Thanh Cong Nguyen

Applied Economics Letters, 2018, vol. 25, issue 8, 518-522

Abstract: This article analyses the effects of involuntary excess reserves (IER) on bankers’ remuneration and the penalty associated with bank risk-taking if discovered. The study finds that IER help conceal tail risks, improves bankers’ performance and remuneration. However, the risks once discovered result in heavy penalties on bankers’ remuneration. The study extends the agency theory to the context where banks hold large IER.

Date: 2018
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DOI: 10.1080/13504851.2017.1340568

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