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Money laundering and bank risk: Evidence from U.S. banks

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  • Yener Altunbaş
  • John Thornton
  • Yurtsev Uymaz

Abstract

We test for a link between bank risk and enforcements issued by U.S. regulators against banks for money laundering (ML) in a sample of 960 publicly listed U.S. banks over 2004–2015. ML‐related enforcements are associated with increased bank risk on several measures of risk with the result robust to a variety of estimation methodologies. Moreover, the impact of ML on bank risk is accentuated by the presence of powerful CEOs and only partly mitigated by large and independent executive boards.

Suggested Citation

  • Yener Altunbaş & John Thornton & Yurtsev Uymaz, 2021. "Money laundering and bank risk: Evidence from U.S. banks," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(4), pages 4879-4894, October.
    • Handle: RePEc:wly:ijfiec:v:26:y:2021:i:4:p:4879-4894
    DOI: 10.1002/ijfe.2044
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    Cited by:

    1. Zhang, Guike & Gao, Zengan & Dong, June & Mei, Dexiang, 2023. "Machine learning approaches for constructing the national anti-money laundering index," Finance Research Letters, Elsevier, vol. 52(C).

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    More about this item

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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