Financial Market Misconduct and Public Enforcement: The Case of Libor Manipulation

Priyank Gandhi, Benjamin Golez (), Jens Carsten Jackwerth () and Alberto Plazzi
Additional contact information
Benjamin Golez: Mendoza College of Business, University of Notre Dame, Notre Dame, Indiana 46556
Jens Carsten Jackwerth: University of Konstanz, 78457 Konstanz, Germany

Management Science, 2019, vol. 65, issue 11, 5268-5289

Abstract: Using comprehensive data on London Interbank Offer Rate (Libor) submissions from 2001 through 2012, we provide evidence consistent with banks manipulating Libor to profit from Libor-related positions and to signal their creditworthiness during distressed times. Evidence of manipulation is stronger for banks that were eventually sanctioned by regulators and disappears for all banks in the aftermath of the Libor investigations that began in 2010. Our findings suggest that the threat of large penalties and the loss of reputation that accompany public enforcement can be effective in deterring financial market misconduct.

Keywords: Libor; manipulation; financial market misconduct; enforcement (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (14)

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https://doi.org/10.1287/mnsc.2018.3065 (application/pdf)

Related works:
Working Paper: Financial Market Misconduct and Public Enforcement: The Case of Libor Manipulation (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:65:y:2019:i:11:p:5268-5289

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