This paper analyzes the relation between CEOs monetary incentives, financial regulation and risk in banks. We present a model where banks lend to opaque entrepreneurial projects to be monitored by managers; managers are remunerated according to a pay-for-performance scheme and their effort is...

The increasing complexity of large financial firms has led to consideration of alternative regulatory structures. This has intensified recently because of the worldwide turmoil in financial markets. One important consideration has been to increase reliance on market discipline—most notably,...

This is a chapter for a forthcoming volume Oxford Handbook of Financial Regulation (Oxford University Press 2014) (eds. Eilís Ferran, Niamh Moloney, and Jennifer Payne). It provides an overview of EU financial regulation from the first banking directive up until its most recent developments in...

Spanish savings banks (Cajas de Ahorro) have had a long and distinguished history over more than 100 years of existence. They have served well the community and small businesses. However, they have been heavily affected by the 2007 banking crisis and they are on the verge of disappearing. Some...

This study offers insight into the role of board politicization on the Spanish cajas' performance from a dual perspective. First, we analyze the effect of a new kind of political directors who occupy board seats as representatives of stakeholders outside the public administrations while...

In this paper, a law reform is evaluated that aimed at improving the corporate governance of German savings banks by tightening accountability and legal liability of outside directors. The causal effect of this reform on bank risk is identified by difference-in-differences and triple differences...

We employ a natural experiment from the 1980s, predating the ubiquitous clamor for independence influenced corporate governance structures, to examine which governance mechanisms are associated with firm survival and failure. We find that thrifts were more likely to survive the thrift crisis...

An empirical analysis of a sample of publicly-traded thrifts demonstrates that there is little evidence that the supervisory goodwill “asset” conferred on thrifts by regulators in the late-1970s and 19080s possessed meaningful economic value in 1989 when, pursuant to the Financial...

The relative costs of misclassifying institutions by their financial health is an issue that concerns researchers. In this paper, a model and decision rule are developed that improve the probability of identifying those Savings and Loans that are predicted not to fail, but are actually failing....