3. At the end of 2007 the prevalent bankers' compensation structure came into spotlight. For instance, on January 9, 2008 Raghuram Rajan wrote in FT: "Banks have recently been acknowledging enormous losses, yet those losses are barely reflected in employee compensation. For example, Morgan Stanley announced a $9.4bn charge-off in the fourth quarter and at the same time increased its bonus pool by 18 per cent." Can this quote help relating bankers' return (employees, NOT bank shareholders!) structure to one of the asymmetric information problems? If yes, why? 6

3. At the end of 2007 the prevalent bankers' compensation structure came into spotlight. For instance, on January 9, 2008 Raghuram Rajan wrote in FT: "Banks have recently been acknowledging enormous losses, yet those losses are barely reflected in employee compensation. For example, Morgan Stanley announced a $9.4bn charge-off in the fourth quarter and at the same time increased its bonus pool by 18 per cent." Can this quote help relating bankers' return (employees, NOT bank shareholders!) structure to one of the asymmetric information problems? If yes, why? 6

Macroeconomics

13th Edition

ISBN:9781337617390

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter15: Monetary Policy

Section: Chapter Questions

Problem 12QP

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