Money laundering and bank risk: Evidence from <scp>U.S.</scp> banks

Altunbaş, Yener; Thornton, John; Uymaz, Yurtsev

doi:10.1002/ijfe.2044

Cited by 6 publications

(4 citation statements)

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“…Altunbas et al. (2020) tested for a relationship between bank risk and the enforcements issued by US regulators against banks for money laundering (ML). ML‐related enforcements are associated with increased bank risk on several measures of risk with the result being robust to a variety of estimation methodologies.…”

Section: Resultsmentioning

confidence: 99%

“…Other studies (Köster & Pelster, 2018) have associated the implementation of measures by regulators against misconduct in the banking industry with the level of risk taken on by these entities and have concluded that there is an increase in systemic risk. Altunbas et al (2020) tested for a relationship between bank risk and the enforcements issued by US regulators against banks for money laundering (ML). MLrelated enforcements are associated with increased It is also worth noting another group of studies that researched the effect of disciplinary sanctions on the traditional activity of banks-that is, on deposits and loans-that have significant macroeconomic effects.…”

Section: Clustersmentioning

confidence: 99%

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Mapping research on corporate misconduct in banking: Lessons from literature on preventive and punitive actions

Rodríguez‐Arrojo,

Luna,

Vázquez‐Ordás

et al. 2024

Global Policy

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Advanced societies are increasingly concerned about corporate misconduct. Citizens are more willing to penalize it, and regulators are punishing companies more significantly than ever before. In particular, while reputation is a key asset for any business, corporate conduct has proven to be especially relevant in the banking industry. The present paper explores the main research efforts carried out on this topic, aiming to learn lessons from a comparison of studies focused on preventive and punitive actions. To accomplish this, we selected relevant corporate misconduct papers from the Web of Science, conducted a comprehensive bibliometric analysis to understand the role of banking industry‐oriented research, and finally, performed a systematic review to distinguish between articles addressing impact measurement and those focusing on prevention. The results allowed us to respond to the unanswered questions regarding the particularities of the banking industry that make it require further and independent analysis and to the debate about whether the current regulation led to certain unwanted effects. Among those many lessons, one is strikingly important as most studies coincide in the conclusion that, instead of the current actions, more effort should be put into efficient prevention methods, such as education for more ethical corporate and individual behavior.

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Section: Resultsmentioning

confidence: 99%

Section: Clustersmentioning

confidence: 99%

Mapping research on corporate misconduct in banking: Lessons from literature on preventive and punitive actions

Rodríguez‐Arrojo,

Luna,

Vázquez‐Ordás

et al. 2024

Global Policy

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“…In the previous literature, several studies examining the effects of ML on the financial performance of firm performance and economic development (Altunbaş et al, 2021;Shah et al (2022) determined How money laundering (ML) affects the loan portfolio quality of Islamic bank. The methodology used the data of conventional and Islamic banks of Pakistan from 2012 to 2018.…”

Section: Money Laundering and Firm Performancementioning

confidence: 99%

The Effect of Corruption and Money Laundering on Banking Profitability and Stability of Licensed Commercial Banks in Sri Lanka

Hendeniya,

Premarathna,

Tennekoon

2023

J. Bus. Technol.

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This study investigated the impact of corruption and money laundering on banking profitability and stability of licensed commercial banks in Sri Lanka, by using the panel data of 24 licensed commercial banks from 2015-2021 in Sri Lanka. The data for this study was collected from secondary data sources. In the study, corruption and money laundering data were obtained from Transparency International and Basel Institute of Governance, respectively. The analysis of the study followed the multiple regression analysis. Further, this study used fixed effect and random effect regression techniques for analyzing the data. The result of the study found evidence consistent with previous studies indicating that corruption has a negative and money laundering has a positive relationship with the banking profitability. Further, this paper also found that bank size and management efficiency also have positive impact on banking profitability and stability. Based on the findings of the study Government can take necessary actions to uplift the knowledge of Corruption and Money Laundering in accordance with the findings of this research. Moreover, findings of this study will be useful for future researchers to enhance their knowledge on this area of study.

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“…Although banking firms appear to have lower direct ES impacts relative to their industrial counterparts, banks facilitate industrial activities by lending to firms that may engage in socially irresponsible corporate behaviours such as pollution, manufacturing of hazardous products and human rights violations (Kotchen and Moon, 2012; Thompson and Cowton, 2004). Anecdotal evidence suggests that banks have been accused of facilitating unethical social behaviours such as corruption, bribery and money laundering, in addition to other dubious lending, investment and asset management practices (Altunbaş, Thornton and Uymaz, 2021; Arnold, 2018).…”

Section: Introductionmentioning

confidence: 99%

Drivers of Global Banking Stability in Times of Crisis: The Role of Corporate Social Responsibility

Trinh

Elnahass

2022

British J of Management

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This study examines the effect of environmental and social (ES) activities on global banking stability in the shadow of the COVID-19 pandemic. Using a sample of 244 commercial banks across 52 countries from 2002 to 2020, we provide evidence that during the global health crisis, banks with higher levels of ES activities are more financially stable (i.e. lower credit and liquidity risk exposures). Drawing on social capital and stakeholder theories, we find that ES activities increase firm-level social capital and establish a stakeholder-centred culture within a bank, strengthening social trust and public confidence in the bank's risk oversight. Accordingly, ES activities constrain excessive and aggressive bank risk-taking during turbulent times when short-termism prevails. Our additional analysis reveals that investors value such beneficial effects of ES activities. The findings offer new insights into the increasingly significant roles of social capital creation and stakeholder-centred culture in maintaining banks' financial stability.

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Money laundering and bank risk: Evidence from U.S. banks

Abstract: We test for a link between money laundering and bank risk in US banks. We find that money laundering increases bank risk according to several measures of risk, with the effect on risk only partly mitigated by large and independent executive boards and accentuated by powerful CEOs.

Cited by 6 publications

References 50 publications

Mapping research on corporate misconduct in banking: Lessons from literature on preventive and punitive actions

Mapping research on corporate misconduct in banking: Lessons from literature on preventive and punitive actions

The Effect of Corruption and Money Laundering on Banking Profitability and Stability of Licensed Commercial Banks in Sri Lanka

Drivers of Global Banking Stability in Times of Crisis: The Role of Corporate Social Responsibility

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