The Policy Effect Of Deferred Compensation On The Development Of Banks’ Credit Business And Its Regulatory Implications

Since the outbreak of the international financial crisis,inappropriate compensation incentives for senior executives of commercial banks have been an important cause of excessive risk-taking in commercial banks,which has become a social consensus.In 2010,China’s Banking Regulatory Commission(CBRC)issued the guidelines for the supervision of prudent remuneration in commercial banks,aiming to restrict the improper profit seeking behavior of senior-management of commercial banks by extending the payment period of performance-based remuneration.In theory,the implementation of this policy is likely to reduce the bank’s risk bearing,especially the non-performing rate of credit business with high risk,and promote the business development to be better.This paper selects the data of China’s banking industry from 2010 to 2021.which has been impacted by the policy of the regulatory guidelines since 2010.Through the analysis and research of the multi-point double difference method and the propensity score matching method,it is found that the deferred executive compensation policy not only reduces the non-performing rate of Bank credit business.but also seriously restricts the scale of credit business and the development of bank business performance,Moreover,in terms of bank risk bearing,the relatively short deferred payment period led to the periodic profit seeking behavior of the bank’s senior management,which greatly reduced the binding effect of the policy.At the same time,through the heterogeneity test and group empirical research,it is found that the policy effect of deferred executive compensation is different in different economic development regions,different market-oriented regions,and different types of commercial banks.Therefore,from the perspective of supervision,this paper puts forward optimization suggestions on the deferred executive compensation policy in terms of deferred payment cycle,constraint means,policy implementation standard setting,supervision and management.At the same time,from the perspective of commercial bank operators,it puts forward implementation suggestions on the implementation level of deferred executive compensation policy,the improvement of credit business quality and the development of business performance.