We develop a conceptual framework that links the compensation incentives of bank executives to the risk and return externalities generated by banks but borne by society. Using 1994 to 2016 data from large U.S. commercial banks, we find that CEO pay-performance incentives reduce both negative systemic risk externalities and positive liquidity creation externalities, while pay-risk incentives increase both externalities. Our findings offer support for Federal Reserve guidelines that encourage greater reliance on long-term equity-based compensation, and they infer a regulatory tradeoff: Bank executive pay rules aimed at reducing systemic risk will result in reduced system-wide liquidity creation as well.

我们开发了一个概念框架，将银行高管的薪酬激励与银行产生但由社会承担的风险和回报外部性联系起来。使用美国大型商业银行 1994 年至 2016 年的数据，我们发现 CEO 薪酬绩效激励降低了负的系统性风险外部性和正的流动性创造外部性，而薪酬风险激励增加了这两种外部性。我们的研究结果支持美联储鼓励更多依赖长期股权薪酬的指导方针，并推断出监管权衡：旨在降低系统性风险的银行高管薪酬规则也将导致系统范围内的流动性创造减少。