Bank Executive Compensation: A Review of the Literature

Abstract

There are many factors that influence the efficiency of the remuneration system and it is very difficult to reach a consensus on best practice. These difficulties, when dealing with the banking sector, are intensified by the nature of financial intermediaries. Remuneration systems in the banking sector can generate unintended consequences such as systemic risk, which often lead to managers being paid more than in other sectors. In this dissertation we will analyse remuneration both for managers in the banking sector and for managers in the non-financial sector.