Financial sector compensation and excess risk-taking—a consideration of the issues and policy lessons

Krishnan Sharma

Working Papers from United Nations, Department of Economics and Social Affairs

Abstract: This paper surveys the ways that the structure and magnitude of financial sector compensation can generate incentives for excessive risk taking. It also highlights the underlying economic and institutional forces that have underpinned and sustained these pay structures, including aspects of corporate governance in financial institutions, regulatory capture by financial elites, the nature of the labour market for finance professionals and the extended economic boom of the 1990s and 2000s. The measures endorsed by the Financial Stability Board and the G20 for sound compensation practices do not go far enough in several areas; a broader set of measures need consideration.

Keywords: financial market compensation; financial institutions; excess risk-taking; magnitude and structure of pay; governance of compensation; labour market mobility; regulation (search for similar items in EconPapers)
JEL-codes: G1 G2 G28 G3 J63 M52 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2012-04
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.un.org/esa/desa/papers/2012 (application/pdf)
Our link check indicates that this URL is bad, the error code is: 403 Forbidden (http://www.un.org/esa/desa/papers/2012 [301 Moved Permanently]--> https://www.un.org/esa/desa/papers/2012 [301 Moved Permanently]--> http://www.un.org/esa/desa/papers/2012/ [301 Moved Permanently]--> https://www.un.org/esa/desa/papers/2012/)

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:une:wpaper:115

Access Statistics for this paper

More papers in Working Papers from United Nations, Department of Economics and Social Affairs Contact information at EDIRC.
Bibliographic data for series maintained by Aimee Gao ().