Deferred Compensation、Information Transparency And Asset Allocation At Banks

As an important part of the financial system,banks play an important role in financing and resource allocation.Their stable operation is related to financial stability and economic development.A large number of studies show that the traditional salary incentive method has improved the risk preference of bank managers and increased bank risks.In order to solve this problem,foreign bank regulators have put forward new measures of deferred compensation in order to reduce the risk-taking behavior of bank executives in the process of operation.China Banking Regulatory Commission has also made inside debt the focus of salary reform,and put forward a request for deferred salary payment in commercial banks in 2010.Foreign practical experience and academic research have shown that the deferred payment system can reduce banks’ risk-taking level and restrain managers’ excesses.However,in our country,there are not many researches on deferred compensation in banking industry.Therefore,this paper will study the impact of deferred payment policy on bank asset allocation behavior based on the implementation opportunity of deferred payment policy in China and the micro data of commercial banks in China.Loan and shadow banking are important manifestations of bank asset allocation behavior,so this paper mainly studies the influence of salary deferred payment policy on bank asset allocation behavior from the perspective of bank loan and shadow banking,and explores whether this influence is different between listed and unlisted banks and banks with different risk levels.The study found that:(1)there is a significant negative correlation between deferred compensation policy and bank loan size,and a significant positive correlation with shadow banking business.that is,banks implementing deferred compensation will reduce the proportion of loans to total assets and increase the size of shadow banking business.This shows that the influence of salary delay policy on bank asset allocation behavior is mainly reflected in the dynamic adjustment of bank asset business structure by senior executives.(2)The negative correlation between salary delay and loan size is significant in unlisted banks and high-risk banks,while the positive correlation between salary delay and shadow banking business size is significant in listed banks and high-risk banks.This shows that the executive’s response to the implementation of the deferred compensation policy is different among different types of banks.Senior management’s adjustment to these two asset businesses depends on the risk level of the bank’s main body.When the bank’s risk level is high,the stronger the motivation to convert the on-balance-sheet risks to off-balance-sheet risks is when the bank adjusts its business scale.The level of transparency reflects different levels of bank governance and internal environment.Therefore,this paper further studies the impact of transparency on the relationship between salary delay and asset allocation.This paper finds that bank transparency will weaken the negative correlation between salary delay and loan size,and also weaken the positive correlation between salary delay and shadow banking business size.This shows that the lower the transparency level of banks,the more obvious the effect of the deferred payment policy will be.When the deferred compensation policy is implemented,the management will reduce the loan size to reduce the bank risks.However,compared with other business risks,the shadow banking business risks are not easy to be monitored and the supervision level is lower,providing the bank managers with the opportunity of regulatory arbitrage to improve the shadow banking business scale.At the same time,the regulatory effect of transparency also shows that under the current low level of transparency in China’s banks,the deferred payment policy is conducive to inhibiting the excessive expansion of credit scale.While enhancing transparency is conducive to shadow banking supervision.