Journal Article

Corporate culture in banking

Abstract: Until recently, regulatory discourse has paid scant attention to the issue of organizational culture in banking. Yet ethical lapses and systematic weaknesses exposed in the 2007-09 financial crisis suggest that future policy dialogue is unlikely to ignore culture?s significance. Drawing from an approach developed in organizational behavior research, the author introduces a framework for diagnosing and changing corporate culture in a way that more effectively supports the bank?s growth strategy and induces behavior that enhances financial stability. The normative exercise, highlighting the tensions and trade-offs arising from competing organizational goals, is useful for bank leaders seeking to foster a specific culture. An examination of bank culture under the ?Competing Values Framework? also offers insights for policymakers designing regulations that proactively address foreseeable problems.

Keywords: deferred cash compensation; managerial incentives; financial stability; risk management;

JEL Classification: G28; G21;

Bibliographic Information

Provider: Federal Reserve Bank of New York

Part of Series: Economic Policy Review

Publication Date: 2016

Issue: Aug

Pages: 5-16