TY - JOUR

T1 - Money laundering and bank risk: evidence from US banks

AU - Altunbas, Yener

AU - Thornton, John

AU - Uymaz, Yurtsev

PY - 2021/10

Y1 - 2021/10

N2 - We test for a link between bank risk and enforcements issued by US regulators against banks for money laundering (ML) in a sample of 960 publicly listed US banks over 2004-2015. ML-related enforcements are associated with increased bank risk on several measures of risk with the result robust to a variety of estimation methodologies. Moreover, the impact of money laundering on bank risk is accentuated by the presence of powerful CEOs and only partly mitigated by large and independent executive boards.

AB - We test for a link between bank risk and enforcements issued by US regulators against banks for money laundering (ML) in a sample of 960 publicly listed US banks over 2004-2015. ML-related enforcements are associated with increased bank risk on several measures of risk with the result robust to a variety of estimation methodologies. Moreover, the impact of money laundering on bank risk is accentuated by the presence of powerful CEOs and only partly mitigated by large and independent executive boards.

KW - Bank risk

KW - Money laundering

KW - Bank boards

KW - CEO power

KW - US banks

U2 - 10.1002/ijfe.2044

DO - 10.1002/ijfe.2044

M3 - Article

VL - 26

SP - 4879

EP - 4894

JO - International Journal of Finance and Economics

JF - International Journal of Finance and Economics

SN - 1099-1158

IS - 4

ER -