Does espoused risk culture pay? Evidence from European banks

A poor risk culture was one of the causes financial crisis. Surprisingly, there is no evidence link between and bank stability. Using a large sample European banks from 2004 to 2017, our paper shows that sound leads better performance. Our research design based on three steps. First, we developed new Sound Risk Culture Indicator Financial Stability Board (2014) framework. Second, estimated this metric by applying Quantitative Text Analysis. Third, used an IV 2SLS panel data approach establish causal profitability.