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Bank Misconduct Hotspots: County-Level Analysis of Social, Cultural, and Regulatory Factors

Author

Listed:
  • Giulia Fantini

    (School of Management, Swansea University)

  • Linh Tran

    (School of Management, Swansea University)

  • Vineet Upreti

    (School of Management, Swansea University)

  • Tim Zhou

    (School of Management, Swansea University)

Abstract

We present empirical evidence on the county level clustering of enforcement actions (EAs) imposed by three US banking regulators on banks and their management for misconduct. We also examine moderating factors that impact this clustering. Our findings reveal that higher levels of social capital and EA disclosure are associated with reduced misconduct at both the bank and management levels. Further, proximity to regulatory offices is particularly effective in identifying serious misconduct. Conversely, a pro-business attitude correlates with lower levels of minor bank-level misconduct but is linked to poorer managerial behavior, regardless of sanction severity. These results underscore the varied influence of local social, cultural and regulatory factors on bank misconduct and the associated regulatory actions.

Suggested Citation

  • Giulia Fantini & Linh Tran & Vineet Upreti & Tim Zhou, 2024. "Bank Misconduct Hotspots: County-Level Analysis of Social, Cultural, and Regulatory Factors," Working Papers 2024-08, Swansea University, School of Management.
    • Handle: RePEc:swn:wpaper:2024-08
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    File URL: https://rahwebdav.swan.ac.uk/repec/pdf/WP2022-08.pdf
    File Function: First version, 2024
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    More about this item

    Keywords

    Banks; Misconduct; Enforcement actions;
    All these keywords.

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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