Announcements

Finance Seminar- Ata Can Bertay

Author: CASE
Time: 11:30
Location: CASE 127

KOC UNIVERSITY
FACULTY OF ADMINISTRATIVE SCIENCES  AND ECONOMICS

FINANCE SEMINAR 

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Speaker:  Ata Can Bertay- The World Bank

Title:   Leverage, Bank Employee Compensation and Institutions

Date:  February 12,2019 -TUESDAY

Time: 11:30-13:00

Place: CASE 127

Abstract : This paper investigates the empirical relationship between nancial structure and employee compensation in the banking industry. Using an international panel of banks, we show that well-capitalized banks pay higher wages to their employees. Our results are robust to changes in measurement, model speci cation and estimation methods. In order to account for the positive association between bank capital and employee compensation, we illustrate a stylized 3-period model and show that well-capitalized banks have incentives to pay higher wages to induce monitoring. Such monitoring rents of employees at capitalized banks are expected to be higher in societies with weak institutions. Further empirical analysis shows that the weaker is institutional quality of a country the stronger is the positive relationship between bank capital and wages - supporting our theoretical conjectures.