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The determinants of reputational risk in the banking sector

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  • Fiordelisi, Franco
  • Soana, Maria-Gaia
  • Schwizer, Paola

Abstract

What determines reputational loss following operational losses in banking? The purpose of this paper is to empirically address this question. We estimate the reputational risk for a large sample of banks in Europe and the US between 2003 and 2008. We have two main results. First, we provide evidence that there is the probability that reputational damage increases as profits and size increase. Second, we show that a higher level of capital invested and intangible assets reduce the probability of reputational damage.

Suggested Citation

  • Fiordelisi, Franco & Soana, Maria-Gaia & Schwizer, Paola, 2013. "The determinants of reputational risk in the banking sector," Journal of Banking & Finance, Elsevier, vol. 37(5), pages 1359-1371.
    • Handle: RePEc:eee:jbfina:v:37:y:2013:i:5:p:1359-1371
    DOI: 10.1016/j.jbankfin.2012.04.021
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    More about this item

    Keywords

    Reputational risk; Operational losses; Financial companies; Event study;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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