Workforce Policies and Operational Risk: Evidence from U.S. Bank Holding Companies

58 Pages Posted: 1 Feb 2021

See all articles by Filippo Curti

Filippo Curti

Federal Reserve Banks - Quantitative Supervision & Research

Larry Fauver

University of Tennessee, Knoxville - Department of Finance; University of Tennessee

Atanas Mihov

University of Kansas - School of Business

Date Written: December 11, 2020

Abstract

Using supervisory data on operational losses from large U.S. bank holding companies (BHCs), we show that BHCs with socially responsible workforce policies suffer lower operational losses per dollar of total assets and incidence of tail risk events. The association is more pronounced for institutions that: (i) are larger and more complex, (ii) have better corporate governance, or (iii) have recently experienced larger operational losses. It also significantly varies by the type of workforce policies and the type of operational losses. Our findings have important implications for banking organization performance, risk and supervision.

Keywords: Banking; Bank Holding Companies; Operational Risk; Workforce Policies; Corporate Social Responsibility

JEL Classification: G21, G28, G29

Suggested Citation

Curti, Filippo and Fauver, Larry and Mihov, Atanas, Workforce Policies and Operational Risk: Evidence from U.S. Bank Holding Companies (December 11, 2020). Available at SSRN: https://ssrn.com/abstract=3747134 or http://dx.doi.org/10.2139/ssrn.3747134

Filippo Curti (Contact Author)

Federal Reserve Banks - Quantitative Supervision & Research ( email )

United States

Larry Fauver

University of Tennessee, Knoxville - Department of Finance ( email )

424 Stokely Management Center
Knoxville, TN 37996
United States

University of Tennessee ( email )

424 Stokely Management Center
Department of Finance
Knoxville, TN 37996-0540
United States
865-974-1722 (Phone)
865-974-1716 (Fax)

Atanas Mihov

University of Kansas - School of Business ( email )

1654 Naismith Dr
Lawrence, KS 66045
United States

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