Understanding the LIBOR Scandal: The Historical, the Ethical, and the Technological

49 Pages Posted: 19 Sep 2019 Last revised: 27 Apr 2020

See all articles by Xing Huan

Xing Huan

University of Warwick - Accounting Group

Gary Previts

Case Western Reserve University - Department of Accountancy

Antonio Parbonetti

University of Padua

Date Written: August 28, 2015

Abstract

We examine the conceptions of financial regulation through the lens of the 2012 LIBOR scandal. The narrative of the scandal addresses the debate surrounding the public versus private view of banking regulation. We propose a theoretical model that conceptualizes the interplay of three natures—human, structural, and technological—the overlaps of which are elaborated as regulatory capture, speculative behavior, and financial system design. Evident in these areas is a theory of banking regulation that we advance: that regulation should aim to curb speculation that arises from technology used by humans, recognize the capitalistic and interest-calculating nature of the financial industry and the structural constraints on the existing financial system, and design incentive structures that engage key players to serving the policies.

Keywords: banking regulation, financial innovation, financial system, regulatory capture

JEL Classification: N20, N40

Suggested Citation

Huan, Xing and Previts, Gary J. and Parbonetti, Antonio, Understanding the LIBOR Scandal: The Historical, the Ethical, and the Technological (August 28, 2015). Available at SSRN: https://ssrn.com/abstract=3449381 or http://dx.doi.org/10.2139/ssrn.3449381

Xing Huan (Contact Author)

University of Warwick - Accounting Group ( email )

Warwick Business School
Coventry CV4 7AL
United Kingdom

Gary J. Previts

Case Western Reserve University - Department of Accountancy ( email )

Cleveland, OH 44106-7235
United States
216-368-2074 (Phone)
216-368-4776 (Fax)

Antonio Parbonetti

University of Padua ( email )

Via del Santo 33
Padova, 35123
Italy
+39 049 8274261 (Phone)

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