Jokivuolle, Esa; Keppo, Jussi; Yuan, Xuchuan - Suomen Pankki - 2015
deferrals reduce risk-taking. However, the banker's optimal risk-taking also depends on the costs of risk-taking. We calibrate …, whereas capping the bonus at the level of the base salary substantially reduces the bankers’ risk-taking. Our results suggest … that the European Union's bonus cap reduces risk-taking whereas bonus clawbacks as prescribed in the Dodd-Frank Act appear …