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Abstract
In the finance industry, risk compliance has become an important issue after numerous policy violations resulting in significant costs for financial institutions and society as a whole. We run a lab-in-the-field experiment with 269 finance professionals, to investigate the effects of financial incentives and workplace culture on risk compliance. Relative to variable remuneration (linked to expected profits), fixed remuneration increases the proportion of people complying by as much as 25.1 percentage points. This is achieved with no diminution in productivity. Relative to a profit-focused workplace culture, a risk-focused workplace culture increases the proportion of people complying by 16.3 percentage points.
Original language | English |
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Article number | 105611 |
Pages (from-to) | 1-13 |
Number of pages | 13 |
Journal | Journal of Banking and Finance |
Volume | 107 |
Early online date | 1 Oct 2019 |
DOIs | |
Publication status | Published - Oct 2019 |
Bibliographical note
Copyright 2019 The Author(s). Published by Elsevier B.V. Version archived for private and non-commercial use with the permission of the author/s and according to publisher conditions. For further rights please contact the publisher.Keywords
- Risk management
- Banking
- Compliance
- Culture
- Incentives
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Submission to APRA's Consultation: CPS511 Remuneration Revised Draft
Elizabeth Sheedy (Primary Author) & Lyla Zhang (Primary Author)
11 Feb 2021Activity: End user engagement and expertise › Government or international organisation inquiry submission
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Auditing Risk Culture
Elizabeth Sheedy (Speaker)
4 Aug 2021Activity: Talk or presentation › Invited talk