Optimize the Banker’s Multi-Stage Decision-Making and the Mechanism of Pay Contract Influencing on Bank Default Risk in the Long-Term Model
Round 1
Reviewer 1 Report
While I realize that real-world people do not have to be able to understand complex mathematics to make decisions as if the model is descriptive, this seems like an overly-complex mathematical description of what amounts to a simple trade-off between risk and return on the part of a banker. The empirical implementation makes it appear that the only decision-maker in the bank is the bank's CEO. My conjecture is that for real-world bankers, (1) the individual's decision is much simpler than what the model depicts, and (2) that the actual decision-making process is more complex than what the model depicts. The bank's internal institutional structure is not depicted in the model.
The paper says that a robustness check was run using data from United Bankshares, but no further information appears in the paper regarding this check. In addition, while the paper presents its results as a general finding, the empirical results are from only two cases (if the robustness check is included as a case), so while the evidence conforms with the model, it falls short of a good test.
Author Response
Dear Reviewer,
Thank you very much 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. In this revised version, changes to our manuscript within the document were all highlighted by using red colored text. After we have major revised the article, we sent it to MDPI English Editing System to edit, changes by English Editing to our manuscript within the document were all highlighted by using purple colored text.
The main corrections are in the manuscript and the responds to the reviewers’ comments are as follows (the replies are highlighted in red).
Please see the attachment.
Author Response File: 
Author Response.docx
Reviewer 2 Report
The paper's composition is coherent; the structure is logical and meets the goal of the paper. The title "Optimize the Banker’s Multi-stages Decision Making and the Mechanism of Pay Contract Influencing on Bank Default Risk in the Long-term Model" put well the paper's objective; it is clear and expresses the issue being assessed very well. The abstract is formulated adequately along with the true picture of the paper; all required components are mentioned there. All the tools and methods the author uses are reasonable and well described and adequately fit the problem being assessed to give the reliable results. Conclusions are related to the results presented before reflecting the assessed issue at a professional level. All the figures and tables are complete and understandable. Author uses enough formulas, tables and figures featuring a great deal of data being processed hence adding a higher added value to the paper. I found the paper well-written and cohesive. Author appears to be a professional, very well oriented and involved in the issue. The length of the paper is adequate to the significance of the topic. No other modification is necessary. Paper is clear and understandable and the overall level of language being used is very good. This manuscript has a logical layout and its content is suitable for international scientific journal.
Author Response
Dear Reviewer,
Thank you very much for reading our manuscript and reviewing it, which will help us improve it to a better scientific level.
Thank you very much for your constructive comments and suggestions which would help us both in English and in depth to improve the quality of the paper.
We are so grateful and happy to hear that.
Best wishes!
Ma Tianyi
Reviewer 3 Report
The work is interesting, however it has important limitations:
It is difficult to read, because although potential readers know the subject, it is necessary to include more information about the research in order to assess and understand the research presented. Some of the sections present important limitations to understand the research carried out.
My recommendations and suggestions are:
1.- Abstract:
- Do not refer to subsequent work as it is not cited. As it is not correct to cite works in the abstract, delete this information and include it in the introduction.
- Clearly state what the objective of the work is, it is difficult to appreciate with the content of the abstract. Include in it the methodology used, where are the data obtained? (case study). All this information allows the reader to be placed on the content of the investigation.
2.- Introduction: This section also includes the review of the literature and there is a lack of necessary and relevant information to present the research.
- It is recommended to divide this section into two: introduction and review of the literature.
- In the introduction, although briefly, include information on: contextualizing the subject under study, studies that have been carried out and the gap found in the literature that leads to this research. What is the novelty of the study? because it is important? and very important, clearly state what the objective is, and briefly the methodology: statistical technique, and case study (where the data is obtained).
- In the literature review section: include relevant information about it.
- Figure 1: is it self made? specify ...
3.- Section: materials and methods.
- It is necessary to include an introduction in this section. As at the moment the objective was not clearly specified, the reader does not know what will be done in the study.
- sub-section: 2.1. Model Assumptions. - It is recommended not to divide it into subsections since they do not continue enough information to divide the section.
- 2..1.1 and 2.1.4. See Assumptions 1–7 of Black and Scholes (1973) [24] is mentioned. Such information should be included, even if briefly, so that the reader does not have to access said information looking for such work.
Section Results:- The results appear in two different sections. The discussion section also reflects results. It is recommended to group in a single section.
5.- Section discussion:
- This section may confuse the reader. Talk about discussion, and the reader would think that the results obtained will be compared with those of other studies and a discussion of them will be made. However, "A Case Study: John G. Stumpf of Wells Fargo & Co." appears for the first time. Clarify this information.
6.- Conclusions:
- They are poor, considering the empirical work done. What do the authors contribute? to the academic and professional field. What implications do the results have?
- It is recommended to include the limitations of the investigation.
Author Response
Dear Reviewer,
Thank you very much 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. In this revised version, changes to our manuscript within the document were all highlighted by using red colored text. After we have major revised the article, we sent it to MDPI English Editing System to edit, changes by English Editing to our manuscript within the document were all highlighted by using purple colored text.
The main corrections are in the manuscript and the responds to the reviewers’ comments are as follows (the replies are highlighted in red).
Please see the attachment.
Author Response File: Author Response.docx
Round 2
Reviewer 1 Report
The empirical examples using Wells Fargo and United Banshares are interesting as support for the model, but one wonders how general the model is, because only two cases are shown that conform with it.
The paper's model shows that there is an optimal amount of risk-taking by the bank, but does not compare this to a socially optimal amount of risk-taking. Presumably, banks should take some risks. Is the amount of risk that banks actually take greater than, equal to, or less than the optimal amount? Presumably, when big banks like Wells Fargo get bailouts if they take more risk than is socially optimal, the bank itself would do best to take on more risk than is socially optimal. Perhaps the compensation package to the bank's management will offset this, but the model gives no indication.
The rewritten paper reads much better than the original submission. There remain a few grammatical issues, but overall the English is acceptable.
Reviewer 3 Report
The authors have considered and followed the recommendations appropriately. Therefore, the paper can be published in its current state
This manuscript is a resubmission of an earlier submission. The following is a list of the peer review reports and author responses from that submission.
