Research On The Impact Of Executives’ Deferred Compensation Of C Bank On Risk-taking

In 2008,the financial crisis swept the world and caused great damage to the global economy.In examining the causes of the financial crisis,many scholars believed that the unreasonable remuneration system led to excessive risk-taking and profit-seeking behavior in the financial industry,which in turn increased its risk-taking.In 2010,in order to improve the remuneration and risk discipline mechanism of banks,the Chinese regulator introduced relevant policies to set specific regulatory requirements for the deferred payment of remuneration to senior executives of commercial banks,thereby preventing risk-taking behaviour resulting from inappropriate or excessive incentives.Through the five chapters,this thesis aims to determine the relationship between the deferred compensation and risk-taking in commercial banks through industry empirical analysis to specific case analysis from macro to micro.The first chapter is an introduction,which aims to explore the background,significance,content and methodology of the study,and to dissect the innovative and deficient aspects of the thesis.The second chapter contains literature reviews and theoretical foundation.This chapter defines some concepts,conducts literature review and comments on the relationship between various salary incentive policies and risk-taking,and elaborates on related theories.An overview of the current situation of the implementation of executive compensation deferral policies in China is also provided.The third chapter is an overall analysis of the industry,starting with an analysis and interpretation of industry policies,followed by an empirical analysis of 42 A-share listed commercial banks from 2007 to 2021,leading to the general conclusion that "deferred executive compensation has a binding effect on banks’ risk-taking".Based on an overall industry analysis,Chapter 4 examines the specific case of Bank C from a micro perspective,and explores the impact mechanism of executive remuneration deferral on risk-taking through the implementation of Bank C’s executive remuneration deferral policy,the changes in risk-taking before and after the implementation of the policy,and the comparison with comparable peer data.The study also examines the strengths and weaknesses of Bank C’s policy implementation.Chapter 5 presents the study’s conclusions and recommendations,including specific recommendations to address the policy formulation and implementation issues identified in the study at Bank C.Based on the empirical evidence and the case study,this thesis concludes that executive compensation deferral has a restraining effect on banks’ risk-bearing from a macro perspective.From a micro perspective,Bank C’s executive compensation deferral policy has helped it to increase the proportion of retail loans and non-interest income and to control its non-performing loan ratio,thereby reducing its risk-taking.Based on the findings of the case study of Bank C,specific recommendations are made in terms of staff coverage and the extent of salary deferral to help Bank C improve the design of its compensation system and maximize the restraining effect of executive salary deferral on risk-taking.The research in this thesis has important theoretical and practical implications for understanding the impact of executive salary deferral on commercial banks’ risk-taking and the governance of executive compensation structures in the banking industry.