The Determinants of Reputational Risk in the Banking Sector
Posted: 27 Jul 2011
Date Written: July 26, 2011
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 U.S. between 2003 and 2008. We have two main results. First, we provide evidence that there is the probability of reputational damage increases as profits and size increase. Second, we show that a higher level of capital invested and intangibles reduce the probability of reputational damage.
Keywords: reputational risk, operational losses, financial companies, event study
JEL Classification: G14, G21
Suggested Citation: Suggested Citation
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