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Digest Finance
 

Comparative assessment of the reputational risk as a tool to regulate 'too-big-to-fail' banks in Russia

Vol. 21, Iss. 2, JUNE 2016

PDF  Article PDF Version

Received: 9 February 2016

Received in revised form: 2 March 2016

Accepted: 18 March 2016

Available online: 17 June 2016

Subject Heading: RISK, ANALYSIS AND EVALUATION

JEL Classification: G21, G24, G32

Pages: 52-60

Evlakhova Yu.S. Rostov State University of Economics, Rostov-on-Don, Russian Federation
evlahova@yandex.ru

Importance The article presents the loss of business reputation as a tool to regulate the Russian 'too-big-to-fail' credit institutions. I substantiate that the reputational risk of 'too-big-to-fail' banks has its theoretical significance for sustainability of the banking sector and should be assessed. I propose my own approach to assessment of the bank's reputational risk and describe how the approach has been tested and approved for a group of the Russian 'too-big-to-fail' banks, according to the data for FY 2014.
Objectives The research substantiates that it is practically important to amplify the spectrum of tools for regulating and supervising the Russian 'too-big-to-fail' banks by assessing their reputational risks.
Methods We used methods of statistical analysis, and ranking techniques.
Results I devised my own approach to the reputational risk assessment in the credit institution and did it in relation to the Russian 'too-big-to-fail' banks in 2014. I determined such banks were exposed to the business reputation risk differently.
Conclusions and Relevance First, whereas 'too-big-to-fail' banks can indemnify damage caused with the loss of business reputation with budgetary funds, it is necessary to amply the spectrum of amplify the spectrum of tools for regulating and supervising the Russian 'too-big-to-fail' banks by assessing their reputational risks. Second, as the money laundering risk and reputational risk in the banks require to examine how the bank's AML/CFT activities influences its business reputation.

Keywords: business reputation risk, money laundering risk, systemically important banks

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