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Do professional norms in the banking industry favor risk-taking?


Cohn, Alain; Fehr, Ernst; Maréchal, Michel (2017). Do professional norms in the banking industry favor risk-taking? Review of Financial Studies, 30(11):3801-3823.

Abstract

In recent years, the banking industry has witnessed several cases of excessive risk-taking that frequently have been attributed to problematic professional norms. We conduct experiments with employees from several banks in which we manipulate the saliency of their professional identity and subsequently measure their risk aversion in a real stakes investment task. If bank employees are exposed to professional norms that favor risk-taking, they should become more willing to take risks when their professional identity is salient. We find, however, that subjects take significantly less risk, challenging the view that the professional norms generally increase bank employees’ willingness to take risks.

Abstract

In recent years, the banking industry has witnessed several cases of excessive risk-taking that frequently have been attributed to problematic professional norms. We conduct experiments with employees from several banks in which we manipulate the saliency of their professional identity and subsequently measure their risk aversion in a real stakes investment task. If bank employees are exposed to professional norms that favor risk-taking, they should become more willing to take risks when their professional identity is salient. We find, however, that subjects take significantly less risk, challenging the view that the professional norms generally increase bank employees’ willingness to take risks.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Economics
Dewey Decimal Classification:330 Economics
Scopus Subject Areas:Social Sciences & Humanities > Accounting
Social Sciences & Humanities > Finance
Social Sciences & Humanities > Economics and Econometrics
Language:English
Date:February 2017
Deposited On:14 Feb 2017 15:00
Last Modified:13 May 2020 21:30
Publisher:Oxford University Press
ISSN:0893-9454
Additional Information:Dieser Artikel ist auch als Working Paper No. 244 des Department of Economics erschienen: https://www.zora.uzh.ch/135996/
OA Status:Green
Publisher DOI:https://doi.org/10.1093/rfs/hhx003
Related URLs:https://www.zora.uzh.ch/135996/

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