Bank Misconduct Hotspots: County-Level Analysis of Social, Cultural, and Regulatory Factors

Giulia Fantini (), Linh Tran (), Vineet Upreti () and Tim Zhou ()
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Giulia Fantini: School of Management, Swansea University
Linh Tran: School of Management, Swansea University
Vineet Upreti: School of Management, Swansea University
Tim Zhou: School of Management, Swansea University

No 2024-08, Working Papers from Swansea University, School of Management

Abstract: We present empirical evidence on the county level clustering of enforcement actions (EAs) imposed by three US banking regulators on banks and their management for misconduct. We also examine moderating factors that impact this clustering. Our findings reveal that higher levels of social capital and EA disclosure are associated with reduced misconduct at both the bank and management levels. Further, proximity to regulatory offices is particularly effective in identifying serious misconduct. Conversely, a pro-business attitude correlates with lower levels of minor bank-level misconduct but is linked to poorer managerial behavior, regardless of sanction severity. These results underscore the varied influence of local social, cultural and regulatory factors on bank misconduct and the associated regulatory actions.

Keywords: Banks; Misconduct; Enforcement actions (search for similar items in EconPapers)
JEL-codes: G18 G21 G28 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2024-11-22
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