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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 ISSN 1540-6288.

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Official URL: https://doi.org/10.1111/fire.12240

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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
Subjects: H Social Sciences > HF Commerce > HF5601 Accounting
H Social Sciences > HG Finance
Divisions: Faculty of Social Sciences > Warwick Business School > Accounting
Faculty of Social Sciences > Warwick Business School
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:
DateEvent
February 2021Published
31 July 2020Available
28 April 2020Accepted
Volume: 56
Number: 1
Page Range: pp. 157-178
DOI: 10.1111/fire.12240
Status: Peer Reviewed
Publication Status: Published
Access rights to Published version: Open Access (Creative Commons)
Date of first compliant deposit: 27 April 2020
Date of first compliant Open Access: 4 August 2020
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  • [DUPLICATE] When LIBOR becomes LIEBOR : reputational penalties and bank contagion. (deposited 27 Apr 2020 12:26)
    • When LIBOR becomes LIEBOR : reputational penalties and bank contagion. (deposited 04 Aug 2020 10:37) [Currently Displayed]

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