I am interested in studying the regulatory sanctions on reputation risk in banking institutions. I want to know the most suitable variable for measuring reputation risk.
I will also appreciate useful papers in this area.
i doubt if you are able to get the data but the number and business due to lost client can be used to measure reputation risk for instance you might take, the number of accounts closed,the decrease in deposit/lending following sanctions etc
A good example of Reputation Risk is that of News Of The World - tabloid paper closed due to massive phone hacking scandals in UK in 2011 to avoid massive regulatory sanctions. As for financial institutions, Reputation Risk is usually monitored by both individual institutions and regulators as the said industry has capability of crippling entire economy. Having said and done as per above, depositors and borrowers are not likely to leave a bank due to emergence of negative information at least in short-term. It can therefore be regarded as low to medium in short-term otherwise depositors would have bolted from bailed out banks in 2008 Global Financial Crisis.