RT Article
T1 Managerial Risk-Taking Behavior: A Too-Big-To-Fail Story
JF Journal of business ethics
VO 149
IS 1
SP 221
OP 233
A1 Zardkoohi, Asghar
A1 Kang, Eugene
A1 Fraser, Donald
A1 Cannella, Albert A., Jr.
A2 Kang, Eugene
A2 Fraser, Donald
A2 Cannella, Albert A. Jr.
LA English
YR 2018
UL https://ixtheo.de/Record/1785664352
AB We examine the implications of the US government’s too-big-to-fail (TBTF) policy as it has been applied to banks. Using alternative measures of risk, we compare the risk-taking behavior of 11 TBTF banks, identified by the Comptroller of the Currency in 1984, to a number of non-TBTF banks. We provide both theory and new empirical evidence to support our argument that the TBTF policy leads management to significantly increase risk-taking, with no corresponding increase in performance. While prior studies have considered the effects of the TBTF policy on limited, but risk-related aspects of bank behavior, such as the cost of funds, our study provides direct evidence about the risk-taking behavior associated with the TBTF policy. Our study has important implications for the current political debate regarding the too-big-to-fail policy.
K1 Performance
K1 Excessive risk-taking behavior
K1 Moral Hazard
K1 Too-big-to-fail
DO 10.1007/s10551-016-3133-7