TITLE:
Excess Liquidity and Bank Managers’ Remuneration: The Role of Monetary Policy
AUTHORS:
Thai Vu Hong Nguyen, Tam Vi An Le, Greeni Maheshwari
KEYWORDS:
Excess Liquidity, Remuneration, Monetary Policy, Emerging Markets
JOURNAL NAME:
Theoretical Economics Letters,
Vol.8 No.12,
September
17,
2018
ABSTRACT: This paper investigates the impacts of monetary
policy on bank managers’ remuneration in Vietnam and China where excess
liquidity is present in the economies. The study argues that excess liquidity
provides the condition to conceal risk taken by bank managers, and hence their
remunerations are improved. However, the capability of excess liquidity in
concealing risk is attenuated during the tightening monetary policy regime. The
study extends the relationship between monetary policy and risk taking
incentives of bank managers to the context of excess liquidity condition.