Do professional norms in the banking industry favor risk-taking?
Alain Cohn,
Ernst Fehr and
Michel Maréchal
No 244, ECON - Working Papers from Department of Economics - University of Zurich
Abstract:
In recent years, the banking industry has witnessed several cases of excessive risk-taking that frequently have been attributed to problematic professional norms. We conduct experiments with employees from several banks in which we manipulate the saliency of their professional identity and subsequently measure their risk aversion in a real stakes investment task. If bank employees are exposed to professional norms that favor risk-taking, they should become more willing to take risks when their professional identity is salient. We find, however, that subjects take significantly less risk, challenging the view that the professional norms generally increase bank employees’ willingness to take risks.
Keywords: Risk culture; banking industry; experiment (search for similar items in EconPapers)
JEL-codes: C93 G02 M14 (search for similar items in EconPapers)
Date: 2017-03
New Economics Papers: this item is included in nep-ban, nep-cbe and nep-exp
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (41)
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Related works:
Journal Article: Do Professional Norms in the Banking Industry Favor Risk-taking? (2017) 
Working Paper: Do Professional Norms in the Banking Industry Favor Risk-taking? (2017) 
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Persistent link: https://EconPapers.repec.org/RePEc:zur:econwp:244
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