Aligning the Compensation with long Tem Performance ….
In the past, the role of the bank’s CEOs was only discussed in the areas of economic and corporate governance, but now this has been shifted towards the business ethics. Some of the scholars, such as Cheng et al (2010), argued that fragile compensation and incentive schemes are the one of the ...
... middle of paper ...
...tant as all the incentives must be linked with the long term performance of the shareholders. The incentives must be rewarded on the basis of developing the shareholder’s wealth in the long term. Finally, in the long run, the main emphasis should be given to the business ethics as banks are unlikely to generate any extra ordinary gains, if their CEOs are not taking the serious risk in their investments. Therefore, it is pointless to focus on only one point that excessive risks taken by banks resulted to financial crises. The concentration must be diverted more towards the redesigning the ethical framework while taking a decision on CEOs incentive structure.
Need Writing Help?
Get feedback on grammar, clarity, concision and logic instantly.Check your paper »
- This Essay will debate whether “bank CEO incentives were a major factor in the credit crisis. In the quest of description of the dramatic breakdown of the stock market capitalization of a great part of the banking industry in the U.S. during the credit crisis, one main argument is that CEO at banks had poor incentives.This collapse had a cascading effect on the entire major financial or credit market across the world. In this downfall, many of the financial services providers like Goldmansach , Royal Bank of Scotland and Lehman Brothers have reported bankruptcy on the heels of severe losses in their mortgages.... [tags: credit crisis, stock market, banks]
1613 words (4.6 pages)
- A credit crisis can also be identified as a shortage of available credit for businesses and consumers. Also known as the credit crunch, these credits may be in the form of personal loans, company loans or credit cards debts. In the past, the term credit crisis was only familiar to people that are involved in the financial sector, but since the occurrence of the 2007-2009 credit crisis in the United States, this term has became a common saying among all walks of life. The credit crisis has affected the lives of many people.... [tags: shortage, financial system, free market economy]
1704 words (4.9 pages)
- Ocaya (2012) state that the credit crisis is a financial market or economic meltdown of borrowing the funds to the borrower and cannot get back, it evaluated by severe shortage of money or credit bring accumulation of bad debts, defaults and falling financial institutions among others. However, the experts and economists are unclear as what form a credit crisis. The Wall Street defines a credit crisis as a “period during which borrowed funds are difficult to get and, even if funds can find, interest rates are very high”.... [tags: Credit Crisis, Finance, Economy]
1552 words (4.4 pages)
- Ocaya (2012) state that credit crisis is a financial market or economic meltdown of lending the funds to the borrower and cannot get back, it evaluated by severe shortage of money or credit bring accumulation of bad debts, defaults and falling financial institutions among others. However, the experts and economists is unclear as what form a credit crisis. The Wall Street defines a credit crisis as a “period during which borrowed funds are difficult to get and, even if funds can found, interest rates are very high”.... [tags: Financial, Economic Meltdown]
1509 words (4.3 pages)
- The credit crisis is referred to as economic downturn by credit squeeze, provision of doubtful debt and bankruptcies among others. (IMF, 1998) Credit crisis is known as a credit crunch, it is an extension of recession. According to the Ocaya (2012), Credit crisis is a sudden shortage of loan and tightened the requirement of economy and society needs of getting loan from financial institutions. In such situation, lender started keeps the cash and stop lending money because they are worry about a large of debtor bankrupt and mortgage defaults.... [tags: events that went wrong in the financial system]
1088 words (3.1 pages)
- Many people today would consider the 2008, United States financial crisis a simple “malfunction” or “mistake”, but it was nothing close to that. Contrary to what many believe, renowned economists and financial advisors regarded the financial crisis of 2007 and 2008 to be the most devastating crisis since the Great Depression of the 1930’s. To make matters worse, the decline in the economy expanded nationwide, resulting in the recession of 2007 to 2009 (Brue). David Einhorn, CEO of GreenHorn Capital, even goes as far as to say "What strikes me the most about the recent credit market crisis is how fast the world is trying to go back to business as usual.... [tags: mortage lenders,us economy,financial crisis]
1519 words (4.3 pages)
- This case discusses a crisis at the Royal Bank of Canada (RBC) that occurred on May 31, 2004. The crises involved a programming change to a vital piece of banking software. An incorrect change to the code led to the failure of the bank’s programs which in turn led to customers that could not check account balances, customers (and non-customers) that did not receive paychecks, automatic payments and bank transfers that were delayed, and duplicate transactions. The code that was entered incorrectly was quickly fixed, but before that could happen, bad data was sent throughout the banking system that was difficult for RBC to track.... [tags: Bank Failure Crisis Finance]
1002 words (2.9 pages)
- A universal bank is a financial institution combining corporate (retail and wholesale) and investing banking activities. Simply put, it performs all functions of a corporate bank; accepting deposits, granting loans, cash management, guarantees and that of an investment bank; managing equity and debt issues for companies, advising on merger and acquisitions, capital market activities and asset management facilities. Barclays, RBS, Standard Chartered for UK, Wells Fargo, Bank of America Merrill Lynch for U.S.A are some examples for universal banks.... [tags: Bank, Banking, Bank of America]
1094 words (3.1 pages)
- Road to crisis • National Mortgage crisis • Bank Crisis & the Federal Bank 's mistakes How the Federal Reserve Reacted • Fed Bails Out Bear Stearns • Bail Out of AIG Insurance Subprime mortgage crisis The subprime mortgage crisis occurred when banks sold too many mortgages to feed the demand for mortgage-backed securities. At the time, the housing market was starting to take off. The housing boom provided a welcome boost to the economy. As house prices rose, people felt wealthier and began spending money more freely.... [tags: Subprime mortgage crisis, Federal Reserve System]
1276 words (3.6 pages)
- I listened to the bad banks broadcast. After listen to the radio program all I could say was WOW!!. Hats off to the DJ and the way he explained the state of affairs. The show explains the existing bank crisis. They put in plain words how it happens and what can and will be done to correct the dilemma. They confer the whys, what and what if of each circumstances. The first subject was how did we get into this disarray in the first place. Well, according to the broadcast one reason was the banks gave out bad mortgage loans to low or no income people that was not creditable.... [tags: US Economy]
738 words (2.1 pages)
- Lifelong Learning For Organizations: Managing Inclusiveness and Growth
- Evaluating the Effect of Garlic Extract on L. Major
- Attitude and Navigation Systems
- Assess the Significance of the League Nations
- The Literary Value of The Lord of the Rings
- Analyzing Management Strategies for Control Applied in Infrastructure