Authors : Asri Laksmi Riani, Taufiq Arifin and Pradityo Abi
Abstract: Researchers investigate the impact of executive compensation on bank performance and risk taking behavior using data for Indonesian commercial banks. The findings confirm that executive compensation could lead to a higher performance. Researchers also conclude that at least in context of Indonesian banking, a higher executive compensation does not bring to a higher risk taking behavior. Researchers argue that the banking oligopoly in Indonesia create less incentive for managers to invest in risky projects, as they enjoy the higher interest rate on loans even in less risky loans.
Asri Laksmi Riani, Taufiq Arifin and Pradityo Abi, 2014. Executive Compensation, Bank Performance and Risk Taking: Some Indonesian Evidence. International Business Management, 8: 394-400.