Are Banks Too Big to Fine?
26 Pages Posted: 9 May 2023 Last revised: 18 Dec 2024
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: Suggested Citation