Rethinking moral hazard: government protection and bank risk-taking

IF 3.2 2区经济学 Q1 ECONOMICS

Socio-Economic Review Pub Date : 2023-09-21 DOI:10.1093/ser/mwad050

Kim Pernell, Jiwook Jung

引用次数: 0

Abstract

Why do firms take excessive risks that result in failure? Moral hazard theorists argue that the answer lies in the risk-boosting effects of the government safety net, which insulates firms from market discipline. We revisit this conventional wisdom by examining how exposure to government protection has contributed to recent trends in bank risk-taking in the USA. Drawing from insights from economic sociology, we highlight an additional way that exposure to government protection can shape organizational behavior: by reducing resource-based profitability pressures that can spur risky behavior. Using panel data analysis of risky US bank behavior between 1994 and 2015, we find that bank exposure to government protection was more often associated with less risk-taking than more of it. This pattern contradicts the predictions of moral hazard theory but aligns with the predictions of our own institutional-resource theory. We discuss implications for economic sociology and financial economics.

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重新思考道德风险:政府保护与银行冒险

为什么企业会冒过多的风险而导致失败?道德风险理论家认为，答案在于政府安全网的风险提升效应，它将企业与市场纪律隔离开来。我们通过研究暴露于政府保护是如何促成美国银行冒险的最近趋势来重新审视这一传统智慧。根据经济社会学的见解，我们强调了政府保护可以塑造组织行为的另一种方式:通过减少可能刺激风险行为的基于资源的盈利压力。通过对1994年至2015年间美国银行高风险行为的面板数据分析，我们发现，银行接受政府保护的风险敞口往往与风险减少有关，而不是与风险增加有关。这种模式与道德风险理论的预测相矛盾，但与我们自己的制度资源理论的预测一致。我们讨论了对经济社会学和金融经济学的影响。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Socio-Economic Review Multiple-

CiteScore

6.80

自引率

10.80%

发文量

期刊介绍： Originating in the Society for the Advancement of Socio-Economics (SASE), Socio-Economic Review (SER) is part of a broader movement in the social sciences for the rediscovery of the socio-political foundations of the economy. Devoted to the advancement of socio-economics, it deals with the analytical, political and moral questions arising at the intersection between economy and society. Articles in SER explore how the economy is or should be governed by social relations, institutional rules, political decisions, and cultural values. They also consider how the economy in turn affects the society of which it is part, for example by breaking up old institutional forms and giving rise to new ones. The domain of the journal is deliberately broadly conceived, so new variations to its general theme may be discovered and editors can learn from the papers that readers submit. To enhance international dialogue, Socio-Economic Review accepts the submission of translated articles that are simultaneously published in a language other than English. In pursuit of its program, SER is eager to promote interdisciplinary dialogue between sociology, economics, political science and moral philosophy, through both empirical and theoretical work. Empirical papers may be qualitative as well as quantitative, and theoretical papers will not be confined to deductive model-building. Papers suggestive of more generalizable insights into the economy as a domain of social action will be preferred over narrowly specialized work. While firmly committed to the highest standards of scholarly excellence, Socio-Economic Review encourages discussion of the practical and ethical dimensions of economic action, with the intention to contribute to both the advancement of social science and the building of a good economy in a good society.