臺大管理論叢 NTU Management Review VOL.29 NO.1

259 NTU Management Review Vol. 29 No. 1 Apr. 2019 Our study also shares the same theme as Fahlenbrach and Stulz’s (2011) study, which examined the association of CEO incentives with bank policies and performance. Although our study did not aim to explore the linkage between financial crises and CEO incentives, our study found that S&P 1,500 banks with higher CEO equity incentives usually had different business policies and maintained relatively higher levels of liquidity. The sample of S&P 1,500 banks also had higher performance compared to S&P 1,500 banks with lower CEO incentives. However, the association between CEO incentives, liquidity policy, and bank performance was unclear for non-S&P 1,500 banks. These relationships were not explored in Fehlenbrach and Stulz’s (2011) or other studies, so our findings are important contributions to the literature. Finally, our study also complements the banking literature related to non-S&P 1,500 banks. Previous studies mainly focused on S&P 1,500 banks, which are large and have been listed on the S&P composite index; few studies have investigated the difference in CEO incentives between listed banks and non-listed banks. Banks within the S&P 1,500 usually receive higher levels of external scrutiny and supervision from market investors, stock analysts, and the media compared to non-S&P 1,500 banks. The different amounts of external scrutiny may lead to different results for these two groups in regard to the linkage between CEO incentives and bank liquidity policy. Berger and Bouwman (2013) found that capital increased small banks’ survivorship and enhanced the bank’s performance during banking crises. Their results highlight the importance of bank size on bank performance. However, their study did not investigate the role of CEO incentives in different sized banks. Our study shows that CEO incentives significantly affect bank business policies, and the effect on policy decision for S&P 1,500 banks and non-S&P 1,500 banks is different. Further study could investigate the reason for this discrepancy. The remainder of this paper is organized as follows. In Section 2, we review the literature and discuss our research hypotheses. Section 3 describes the data, variables, and research design. Section 4 presents our empirical results and the final section concludes with a discussion of the implications and findings. 2. Literature Review and Hypotheses Development 2.1 Previous Studies on the Determinants of Bank Liquidity 2.1.1 Synergy Effect between Transactions, Deposits, and Unused Loan Commitment Commercial banks engage in two distinct types of activities—deposit-taking and lending. Deposits provide a bank with a cash base, but they increase the bank’s need for liquidity because depositors may show up at any time and withdraw money. Loan