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Evaluating Euribor Manipulation: Effects on Mortgage Borrowers

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  • Rodríguez-López, Araceli
  • Fernández-Abascal, Hermenegildo
  • Maté-García, Jorge-Julio
  • Rodríguez-Fernández, José-Miguel
  • Rojo-García, José-Luis
  • Sanz-Gómez, José-Antonio

Abstract

According to European Commission enquiries, several international banks (joined as interest group) manipulated, in an unethical manner, the Euribor calculation process, at least, between September 2005 and May 2008. This interest group was sanctioned for colluding practices, which are forbidden under the regulation of European Union. The paper tests for the existence of the mentioned manipulation with respect to the 12-month Euribor, and analyzes the impact on the mortgage market. Our findings suggest that a significant effect of unethical manipulative behavior on mortgage market, with mortgage borrowers overpaying on interest and potentially taking legal action.

Suggested Citation

  • Rodríguez-López, Araceli & Fernández-Abascal, Hermenegildo & Maté-García, Jorge-Julio & Rodríguez-Fernández, José-Miguel & Rojo-García, José-Luis & Sanz-Gómez, José-Antonio, 2021. "Evaluating Euribor Manipulation: Effects on Mortgage Borrowers," Finance Research Letters, Elsevier, vol. 40(C).
    • Handle: RePEc:eee:finlet:v:40:y:2021:i:c:s1544612320316093
    DOI: 10.1016/j.frl.2020.101795
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    Cited by:

    1. Herrera, Rubén & Climent, Francisco & Carmona, Pedro & Momparler, Alexandre, 2022. "The manipulation of Euribor: An analysis with machine learning classification techniques," Technological Forecasting and Social Change, Elsevier, vol. 176(C).

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    More about this item

    Keywords

    Euribor Manipulation; Mortgage borrowers; Collusive Bank Behavior;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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