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The article discusses the role and the objective function of regional banks which have come under severe examination by the European Commission. It criticizes the economics of regional demarcation in banking which notes that the breaking down of regional markets intensifies competition between regional and private banks. It asserts that regional lending should be more related to state aid and subsidiaries rather than enhancing lending conditions.

This questionnaire survey of fund managers in USA, Germany, and Switzerland documents a distinctly positive influence of bonus payments on investment behavior on both sides of the Atlantic. Higher bonus payments are significantly related to higher working effort but not to risk-taking. They also seem to induce fund managers to rely more on fundamental information. Findings within regions are confirmed by Transatlantic evidence as US fund managers receive larger bonuses but also show the effects to a higher degree. The effects documented are stronger for relative than for absolute performance assessment. (JEL-Codes: G23, G14) [ABSTRACT FROM PUBLISHER]