Did Bankers Pay Cause the Financial Crisis?

Not according to finance professor René M. Stulz (Fisher College of Business at Ohio State University), as reported by the New York Times:

Their study has circulated since summer as a working paper from the National Bureau of Economic Research. The study found few significant correlations one way or the other, but to the extent it saw patterns, they generally ran counter to what’s often assumed. Instead of performing worse, the banks whose C.E.O.’s had the greatest incentives for excessive risk-taking fared better, on average, than others.

In any case, Professor Stulz says he agrees that it is important for C.E.O. pay incentives to reward long-term performance and to discourage excessive risk-taking. Still, based on his study, he says that “it is not right to blame the credit crisis“ on C.E.O. pay incentives.

The New York Times article can be found here.