Are Banks Too Big to Fine?

26 Pages Posted: 9 May 2023 Last revised: 18 Dec 2024

See all articles by Catarina Marvão

Catarina Marvão

Technological University Dublin; Stockholm School of Economics - Stockholm Institute of Transition Economics (SITE)

Valerio Potì

University College Dublin

Giancarlo Spagnolo

University of Rome Tor Vergata; EIEF; Centre for Economic Policy Research (CEPR); Stockholm School of Economics (SITE)

Date Written: February 6, 2017

Abstract

We test the overarching hypothesis that financial institutions face relatively milder fines due to financial stability concerns. To do so, we use an event study approach on a sample of 441 listed cartel members prosecuted by the European Commission between 1998 and June 2020. Our results suggest that banks face a positive effect on their market value upon the dawn-raid and the announcement of the cartel fine, whereas both events negatively (and significantly) affect non-banks. Using a novel measure of “harm”, we show that this positive effect is not driven by the resolution of uncertainty, but is rather a consequence of “too big to fine” concerns.

Keywords: Banks, Antitrust, Financial markets, misconduct, bank fines

JEL Classification: G02, G14, G21, K10, K20, K41, K42

Suggested Citation

Marvão, Catarina and Potì, Valerio and Spagnolo, Giancarlo, Are Banks Too Big to Fine? (February 6, 2017). Available at SSRN: https://ssrn.com/abstract=4441329 or http://dx.doi.org/10.2139/ssrn.4441329

Catarina Marvão (Contact Author)

Technological University Dublin ( email )

Dublin
Ireland

Stockholm School of Economics - Stockholm Institute of Transition Economics (SITE) ( email )

P.O. Box 6501
S-113 83 Stockholm, 11383
Sweden

Valerio Potì

University College Dublin ( email )

M. Smurfit School of Business
Carysfort Avenue, Blackrock
Dublin, Co Dublin
Ireland

HOME PAGE: http://https://people.ucd.ie/valerio.poti

Giancarlo Spagnolo

University of Rome Tor Vergata ( email )

Faculty of Economics - DEF
Via Columbia 2
Rome, RM 00133
Italy

EIEF ( email )

Via Due Macelli, 73
Rome, 00187
Italy

HOME PAGE: http://WWW.EIEF.IT

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Stockholm School of Economics (SITE) ( email )

P.O. Box 6501
Stockholm
Sweden

HOME PAGE: http://https://sites.google.com/site/giancarlospagnoloshomepage/

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