Bank systemic risk and CEO overconfidence

Jin Ping Lee*, Edward M.H. Lin, James Juichia Lin, Yang Zhao

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

8 Scopus citations


This study examines the relationship between CEO overconfidence and banking systemic risk. We employ the CoVaR (Conditional Value-at-Risk) approach to measure a bank's contribution to systemic risk and compute its MES (Marginal Expected Shortfall) and SRISK (Systemic Risk index) to measure the exposure to banking systemic risk. We use a stock options based measure for CEO overconfidence and explore how managerial overconfidence could be associated with banking systemic risk. Using data for U.S. banks from 1995–2014, we find evidence that banks with overconfident CEOs have a higher contribution and exposure to systemic risk than banks with non-overconfident CEOs. We also show that the impact of CEO overconfidence contributed significantly more to systemic risk during the financial crisis of 2008–2009.

Original languageEnglish
JournalNorth American Journal of Economics and Finance
StateAccepted/In press - 2019


  • Banking
  • CEO Overconfidence
  • Finance crisis
  • Systemic risk


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