Financial Options and the Scandal of Banca Popolare Italiana (BPI): An Overnight Business Case

HCVI HDP No. 19

30 Pages Posted: 12 Sep 2007

See all articles by Roger Mills

Roger Mills

Henley Management College - Henley Centre for Value Improvement (HCVI)

Bill Weinstein

Henley Management College

Giampiero Favato

Institute of Leadership and Management in Health - Kingston University

Date Written: August 2007

Abstract

Written immediately after the financial scandal involving the entire Governance of Banca Popolare Italiana (BPI) in 2006, this paper tries to answer the most frequently asked question by small, individual investors: are financial options a fair bet for anyone? Restated in a more general form, this question better reflects the deepest concerns raised by the BPI scandal: is it even conceivable that options' value can be manipulated by bankers in favor of few institutional investors? What is the asymmetry in the option pricing algorithm that would allow an unequal distribution of risk, and consequently of pay-offs, among investors? Are financial options a transparent and credible investment choice for a small investor?

Keywords: governance, bank, financial, options, scandal, BPI

JEL Classification: G21, G14, M41

Suggested Citation

Mills, Roger and Weinstein, Bill and Favato, Giampiero, Financial Options and the Scandal of Banca Popolare Italiana (BPI): An Overnight Business Case (August 2007). HCVI HDP No. 19, Available at SSRN: https://ssrn.com/abstract=1012630 or http://dx.doi.org/10.2139/ssrn.1012630

Roger Mills

Henley Management College - Henley Centre for Value Improvement (HCVI) ( email )

Greenlands
Henley-on-Thames
Oxfordshire RG9 3AU, England
United Kingdom

HOME PAGE: www.henleymc.ac.uk/hcvi

Bill Weinstein

Henley Management College ( email )

Greenlands
Henley-on-Thames
Oxfordshire RG9 3AU, England
United Kingdom

Giampiero Favato (Contact Author)

Institute of Leadership and Management in Health - Kingston University ( email )

Kingston Hill
Kingston upon Thames
Surrey KT2 7LB
United Kingdom

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