Incentives in an international bank
نویسنده
چکیده
Margins in international banking have fallen dramatically during the last years. Therefore, banks face the pressing need to develop more suitable forms of organization and more efficient incentive schemes. In a principal agent framework this paper develops four fundamental rules. The marginal benefits from additional risk taking should be equal to its marginal cost. The top management should set position limits to the local branch managers. Competition across local branches should be used to improve incentives. If the local branch manager can engage in different activities, incentives should be balanced. © 2000 Elsevier Science B.V. All rights reserved. JEL classification: D82; G21
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