The relationship between Global Financial Crisis and the overconfidence of the higher-level management

Decision-making is vital for financial industry. Previous research has indicated potential associations that the overconfidence on banking behavior and performance could make bad effects. The paper seeks to understand and explain the causes of overconfidence and their effects on highest-level managers, and how to led to absurd decision making in Global Financial Crisis (GFC). This paper used literature review to identify the reasons that overconfidence affects the decision-making in banking, and further explore how this relates to GFC. This review found evidence that the managerial hubris of the CEOs and other higher authorities making the banking policies, what makes the banks were the most impacted institutes from this havoc. The overconfident attitude of the CEOs lead to the worst performance of the banks and the risk-taking abilities of the bank were completely modified after the financial crisis was over. As a result of these investigations, suggestions were identified for further research.