Abstract

http://ssrn.com/abstract=1782247
 
 

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Reputational Losses and Operational Risk in Banking


Franco Fiordelisi


University of Rome III, Italy; Washington University, Saint Louis - Olin Business School

Paola Schwizer


University of Parma

Maria-Gaia Soana


University of Parma

March 9, 2011


Abstract:     
Reputation is a key asset for any company whose affairs are based on trust like banks. Despite its importance, the number of studies dealing with reputational risk in financial industry is still limited. We estimate the reputational impact of announced operational losses for a large sample of financial companies in Europe and in the U.S. between 1994 and 2008. By running an event study, we show that substantial reputational losses occur following announcements of “pure” operational losses. We provide evidence that “fraud” is the event type that generates the most reputational damage. “Trading and sales" and “payment and settlement” are the two business lines determining crucial reputational losses. We also find that reputational losses are higher in Europe than in North America.

Number of Pages in PDF File: 44

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Date posted: March 10, 2011  

Suggested Citation

Fiordelisi, Franco and Schwizer, Paola and Soana, Maria-Gaia, Reputational Losses and Operational Risk in Banking (March 9, 2011). Available at SSRN: http://ssrn.com/abstract=1782247 or http://dx.doi.org/10.2139/ssrn.1782247

Contact Information

Franco Fiordelisi (Contact Author)
University of Rome III, Italy ( email )
Via Silvio D'amico, 77
Rome, Rome 00145
Italy
Washington University, Saint Louis - Olin Business School ( email )
One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States
Paola Schwizer
University of Parma ( email )
Via J.F. Kennedy 6
Parma, 43100
Italy
Maria-Gaia Soana
University of Parma ( email )
Via Kennedy 6
Parma, 43100
Italy
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References:  39
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