Link between poor culture and higher bank risk ‘substantial’ – BoE paper
Regulators should ‘interrogate’ firm data to improve bank risk models, economists argue
Poor culture can lead to financial institutions taking substantially higher risks, according to new research from the Bank of England.
Joel Suss, David Bholat, Alex Gillespie and Tom Reader draw a link between bank culture and prudential outcomes using data from “unobtrusive” sources.
Rather than “interrogate” bank employees, the authors interrogated 20 individual indicators that provide insight on “different dimensions of culture”.
The authors not only conclude that poor culture can lead
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