The effect of enforcement actions on lead Arranger’s Reputation: Evidence from syndicated loans.

Abstract

A formal enforcement action on banks for non-compliance with laws and regulations has an adverse effect on bank’s reputation. This thesis examines such case, enforcement action appears as a reputational burden to banks that cause the decrease in bank market’s share and the need to attract more potential participants. Moreover, the impacts of enforcement actions are different to bank’s size and vary by their types. A larger size bank experiences a larger effect from enforcement actions. The more severe enforcement actions are enacted, the more intensive impacts bank receive. The results are proved through an empirical research using syndicated banklevel data and sample of enforcement actions from 1982 – 201