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When LIBOR becomes LIEBOR : reputational penalties and bank contagion
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Fabrizi, Michele, Huan, Xing and Parbonetti, Antonio (2021) When LIBOR becomes LIEBOR : reputational penalties and bank contagion. The Financial Review, 56 (1). pp. 157-178. doi:10.1111/fire.12240
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Official URL: https://doi.org/10.1111/fire.12240
Abstract
We study whether commonality of incentives and opportunity to commit fraud trigger reputational contagion from culpable firms to nonculpable firms. Relying on a sample of 30 banks involved in fixing the London Interbank Offered Rate (LIBOR) and a control sample of 30 banks, we find that banks' reputations suffered substantial damage upon the announcement of their involvement in the scandal. We also document reputational contagion spread from banks that manipulated LIBOR to banks that shared the same incentives and opportunity to commit the fraud. The reputational contagion is more pronounced for large derivatives dealers who have had the strongest incentive to commit the fraud.
| Item Type: | Journal Article | ||||||||
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| Subjects: | H Social Sciences > HF Commerce > HF5601 Accounting H Social Sciences > HG Finance |
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| Divisions: | Faculty of Social Sciences > Warwick Business School > Accounting Faculty of Social Sciences > Warwick Business School |
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| Library of Congress Subject Headings (LCSH): | Bank fraud -- Great Britain, Interbank market -- Great Britain, Bank loans -- Great Britain, Banks and banking -- Corrupt practices -- Great Britain, Interest rates -- Great Britain | ||||||||
| Journal or Publication Title: | The Financial Review | ||||||||
| Publisher: | Wiley-Blackwell Publishing, Inc. | ||||||||
| ISSN: | 1540-6288 | ||||||||
| Official Date: | February 2021 | ||||||||
| Dates: |
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| Date of first compliant deposit: | 27 April 2020 | ||||||||
| Volume: | 56 | ||||||||
| Number: | 1 | ||||||||
| Page Range: | pp. 157-178 | ||||||||
| DOI: | 10.1111/fire.12240 | ||||||||
| Status: | Peer Reviewed | ||||||||
| Publication Status: | Published | ||||||||
| Publisher Statement: | This is the peer reviewed version of the following article: Fabrizi, M, Huan, X, Parbonetti, A. When LIBOR becomes LIEBOR: Reputational penalties and bank contagion. Financial Review. 2021; 56: 157– 178. https://doi.org/10.1111/fire.12240. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions. | ||||||||
| Access rights to Published version: | Open Access | ||||||||
| Version or Related Resource: | https://wrap.warwick.ac.uk/136265 | ||||||||
| Related URLs: | |||||||||
| Open Access Version: |
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[DUPLICATE] When LIBOR becomes LIEBOR : reputational penalties and bank contagion. (deposited 27 Apr 2020 12:26)
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