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Bank frauds hit public sector stocks harder than private lenders, study finds

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Bank frauds hit public sector stocks harder than private lenders, study finds

Bank frauds hit public sector stocks harder than private lenders, study finds

The study found that fraud announcements did not produce uniform or consistently significant cumulative losses across all four cases examined. However, public sector banks showed more immediate negative reactions in some instances, while private sector banks sometimes initially benefited from investors shifting funds away from the affected lender before experiencing adverse reactions later.

Canara Bank posted minus 9 per cent cumulative abnormal returns after its fraud announcement. Public sector peers showed mixed reactions, with significant negative returns in some cases. Private lenders recorded mixed returns, while bank age and trading turnover were positively associated with abnormal returns. Evidence of spillovers was mixed, with findings limited to four fraud cases.

Canara Bank posted minus 9 per cent cumulative abnormal returns after its fraud announcement. Public sector peers showed mixed reactions, with significant negative returns in some cases. Private lenders recorded mixed returns, while bank age and trading turnover were positively associated with abnormal returns. Evidence of spillovers was mixed, with findings limited to four fraud cases. _ Bank fraud announcements can trigger negative spillovers across India's banking sector, but the impact on share prices varies by ownership structure and timing, a study published in the BRICS Journal of Economics has found. Public sector bank stocks showed significant negative abnormal returns in some cases, while private sector lenders experienced mixed reactions, including initial gains followed by losses. Advt

The study found that fraud announcements did not produce uniform or consistently significant cumulative losses across all four cases examined.


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