Financial misconduct and bank risk-taking: evidence from US banks
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DOI
We test for a link between bank risk-taking and regulatory enforcements against US banks for financial misconduct. Misconduct-related enforcements are associated with increased bank risk-taking on several measures of risk, and there is some evidence that the impact of enforcements on risk-taking is accentuated in the presence of powerful CEOs and a higher proportion of institutional investor ownership and mitigated when executive boards are larger, older, more independent, more gender diverse, busier, and where independent directors are relatively inexperienced. The results are robust to alternative measures of bank risk-taking, and alternative estimation techniques, including controlling for endogeneity bias.
Keywords
- Bank risk-taking, financial misconduct, CEO power, executive boards, institutional investors
| Original language | English |
|---|---|
| Article number | 107433 |
| Number of pages | 21 |
| Journal | Journal of Banking and Finance |
| Early online date | 21 Mar 2025 |
| DOIs | |
| Publication status | E-pub ahead of print - 21 Mar 2025 |