XXV Edition

1-2 December 2016"

Reputational risk: understanding the concept and measuring the impact

Miklaszewska Ewa, Cracow University of Economics
Kil Krzysztof, Cracow University of Economics

Protecting reputation is among the most significant challenges facing financial firms today. Crisis and post-crisis restructuring always results in an increased interest in the issues of trust and corporate culture, as scandals and excesses of the pre-crisis period comes to light, and the amounts spent to rescue banks raise public concern. Consequently, there has been a renewed interest in creation of stable and functional risk culture. It includes, among others, a broadening of the scope of analyzed risks, beyond the regulatory requirements. However, it is more difficult to manage reputational risk than other risk categories, as it is difficult to define and quantify. Thus the aim of the paper is to trace the sources and consequences of the reputational risk in banking, as a self-standing type of risk. In the empirical part, the paper attempts to measure the reputational risk for banks in Central and Eastern Europe (CEE-11) by approximating it by the Stakeholder Reputational Score (SRS)index and running the panel models, examining its impact on bank performance.

Area: Risk management

Keywords: reputational risk, bank performance, CEE banks, reputational index

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