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Contribution Details

Type Working Paper
Scope Discipline-based scholarship
Title Do professional norms in the banking industry favor risk-taking?
Organization Unit
  • Alain Cohn
  • Ernst Fehr
  • Michel Maréchal
  • English
Institution University of Zurich
Series Name Working paper series / Department of Economics
Number 244
ISSN 1664-7041
Number of Pages 34
Date 2017
Abstract Text 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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Keywords Risk culture, banking industry, experiment, Risikoverhalten, Risikoaversion, Bank, Berufssoziologie, Experiment
Additional Information Also published as CESifo Working Paper Series No. 6398.