Misconduct and Risk Climate in Banking: Development of a Multidimensional Measurement Scale

Misconduct and risk culture are two critical issues in bank supervision today. This paper reviews recent studies and regulatory documents on both topics to further our understanding of the dimensions that underlie these new, distinct risks to the global banking sector. Based on this review, a multid...

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Bibliographic Details
Published in:Global policy 2020-01, Vol.11 (S1), p.73-83
Main Authors: Fernández Muñiz, Beatriz, Montes Peón, José Manuel, Vázquez Ordás, Camilo José
Format: Article
Language:English
Subjects:
Banking
Climate
Environmental assessment
Environmental risk
International standards
Risk
Risk taking
Supervision
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Summary:Misconduct and risk culture are two critical issues in bank supervision today. This paper reviews recent studies and regulatory documents on both topics to further our understanding of the dimensions that underlie these new, distinct risks to the global banking sector. Based on this review, a multidimensional measurement scale for misconduct and risk climate (M&R climate) is subsequently developed and validated. The scale obtained provides a tool in line with the leading guidelines and recommendations issued by international standard‐setting bodies aimed at assessing M&R climate and monitoring the prevalence of misconduct and excessive risk‐taking behaviours in banking. Culture and climate represent different perspectives on the same phenomenon, with climate being a manifestation of culture. The climate perspective on organizational behaviour offers a more empirical approximation to identify and measure those cultural, organizational, and situational characteristics influencing the behaviour of the organization's members.
ISSN:1758-5880
1758-5899
DOI:10.1111/1758-5899.12752