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Involuntary excess reserve and bankers’ remuneration: evidence from Chinese banks

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  • Thai Vu Hong Nguyen
  • Agyenim Boateng
  • Thanh Cong Nguyen

Abstract

This article analyses the effects of involuntary excess reserves (IER) on bankers’ remuneration and the penalty associated with bank risk-taking if discovered. The study finds that IER help conceal tail risks, improves bankers’ performance and remuneration. However, the risks once discovered result in heavy penalties on bankers’ remuneration. The study extends the agency theory to the context where banks hold large IER.

Suggested Citation

  • Thai Vu Hong Nguyen & Agyenim Boateng & Thanh Cong Nguyen, 2018. "Involuntary excess reserve and bankers’ remuneration: evidence from Chinese banks," Applied Economics Letters, Taylor & Francis Journals, vol. 25(8), pages 518-522, May.
  • Handle: RePEc:taf:apeclt:v:25:y:2018:i:8:p:518-522
    DOI: 10.1080/13504851.2017.1340568
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    Cited by:

    1. Nguyen, Thai Vu Hong & Pham, Tra Thi Thu & Nguyen, Canh Phuc & Nguyen, Thanh Cong & Nguyen, Binh Thanh, 2020. "Excess liquidity and net interest margins: Evidence from Vietnamese banks," Journal of Economics and Business, Elsevier, vol. 110(C).
    2. Sana Ben Abdallah & Dhafer Saidane & Mihaly Petreczky, 2023. "Application of Robust Control for CSR Formalization and Stakeholders Interest," Computational Economics, Springer;Society for Computational Economics, vol. 62(3), pages 891-934, October.

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