February 19, 2026, 11:30–12:30
BDF, Paris
Room Room 4GH and online
Séminaire Banque de France
Abstract
How does pay transparency affect bank opacity? We answer this question by studying the impact of the introduction of pay transparency laws across nine U.S. states with both advert-, individual- and bank-level data. We find that after the introduction: (1) more adverts include pay information; (2) bank employees, especially loan officers, leave for non-banks as wages are higher there; and (3) banks respond to these departures by increasing their own employee compensation. The departures of experienced employees and catch-up in wages precede more bank risk-taking and lower bank loan performance, and dispersion in loan loss provisioning!
Keywords
Pay transparency; wage increases; financial institutions; loan performance;
JEL codes
- J31: Wage Level and Structure • Wage Differentials
- G21: Banks • Depository Institutions • Micro Finance Institutions • Mortgages
- G23: Non-bank Financial Institutions • Financial Instruments • Institutional Investors
- G01: Financial Crises