Internal fraud in the banking industry: A cross-bank analysis on operational loss announcements
Independent thesis Advanced level (professional degree), 20 credits / 30 HE creditsStudent thesis
Managerial and regulatory focus in the financial industryhas been intensified due to a number of extremely costly and highly publicized events. Whenfraudulent activities or any improper business practices are revealed it may damage the bank’sreputation. In the end this can have a big impact on anyone who is any kind of stakeholder.Reputational risk and by what mechanism reputational risk is adversely affecting stock pricesis therefore of great importance for stakeholders. This study aims at providing insights and abetter understanding of reputational risk. We examine the reputational damage in banksresulting from operational losses and analyze the stock market reaction across the bankingindustry.
Research question: What is the effect of operational loss announcements from internalfraudulent activities on competitors in the banking industry?
The results show a positive cross-bank reaction during the observed period oftime. Furthermore, the cross-bank reaction is stronger when a reputational damage isrecognized in the bank where the loss occurred. The results show a positive cross-bankreaction during the observed period of time. Furthermore, the cross-bank reaction is strongerwhen a reputational damage is recognized in the bank where the loss occurred.
Place, publisher, year, edition, pages
2015. , 53 p.
Finance, Banking, Operational risk, Reputational risk, Fraud, Fraudulent activities, Loss announcements, Operational loss announcements, Basel, Banking industry
IdentifiersURN: urn:nbn:se:umu:diva-106103OAI: oai:DiVA.org:umu-106103DiVA: diva2:840508
Retail and Supply Chain Management Program
Hellström, Jörgen, Professor
Nylén, Ulrica, Associate professor