Pay Me Later is Not Always Positively Associated with Bank Risk Reduction—From the Perspective of Long-Term Compensation and Black Box Effect

Round 1

Reviewer 1 Report

The paper presents theoretical and empirical research on the three types of compensation calculations and the relationship with risk in the three dimensions, analyses the changes in their nature in the case of taking bankruptcy and an executive's tenure as a term into consideration.

The topic of the paper fits within the scope of the Journal. It is a new and original contribution.

The abstract should be improved and have to provide more structured aim, scope and background, to state the principal objectives and scope of the investigation, to describe the methods employed, to summarise the results, to state the principal conclusions, recommendation and outlook. The theoretical study should include a literature review based on recently published papers from high-level scientific journals indexed in Clarivate Analytics Web of Science database (years 2017-2019) and trace the intellectual progression of the field. Please extend the list of references including scientific papers published during the years 2017-2019 period. It is highly recommended to look at journals indexed in the Clarivate Analytics Web of Science and Scopus databases. All figures (e.g. Fig.1 and Fig.2) and table 1 must be explained in the text. Discussion section must compare obtained results with other authors.

Author Response

Thank you for reading our manuscript and reviewing it, which will help us improve it to a better scientific level. We revised our manuscript, and quite a lot of changes have taken place. So we have sent the revised manuscript, and a version containing all the changes to be visible.

 

Please see the attachment.

Author Response File: Author Response.pdf

Reviewer 2 Report

The manuscript must better discuss the research topic, since it appears to dwell without finalizing the topic. On the one hand, it seems more a mathematical demonstration theorem than an academic and research paper. On the other, it has a non-traditional structure that creates confusion. For instance, there are some boxes and mathematical equations that even though they are interesting, they may deviate the attention of readers.

The introduction should be focused on a brief summary of the motivation, research question, definitions of key terms, arguments, data used, contributions, and perhaps an outline of the remainder of the paper. The introduction should also clearly state the conversation this manuscript wants to participate.  Perhaps, the authors should dive deeper into previous literature by identifying a common theoretical framework; otherwise, that literature may be disparate and chaotic. This possible limitation is also observed throughout a lack of research questions, propositions or hypotheses.

Lines 60-61: is not possible to mention, “shifting in business model of banks” and risk without considering studies on the relationships between bank business models and risk analysed in the previous literature.  Indeed, Galletta and Mazzù (2019) made a Liquidity Mismatch Index based on the loan-to-deposit ratio on three different bank business models. Moreover, taking into account former studies on the impact of business models on bank stability (Köhler, 2015) in EU countries would improve the literature review part.

Why did the authors consider the time frame from 2007 and 2016 in choosing bank dataset case study? Did they consider the effects of the financial distress? The authors must spend more effort in explaining the dataset. Did the authors provide any robustness check for their results?

The conclusions are incomplete and need to be extended. The conclusion section must be analyzed more, so as to provide a detailed description of the contribution of this study (eg. express better how they “close theoretical gap” referred).

 

I recommend the following references to the authors:

- Galletta, S.; Mazzù, S. Liquidity Risk Drivers and Bank Business Models. Risks 2019, 7, 89

- Köhler, M. (2015). Which banks are more risky? The impact of business models on bank stability. Journal of Financial Stability, 16, 195-212.

Author Response

Thank you for reading our manuscript and reviewing it, which will help us improve it to a better scientific level. We revised our manuscript, and quite a lot of changes have taken place. So we have sent the revised manuscript, and a version containing all the changes to be visible.

Please see the attachment.

 

Author Response File: Author Response.pdf

Round 2

Reviewer 2 Report

The paper has been improved and the suggestions made have been accepted. Some minor revision in English language and style is necessary.