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Regulating fraud in financial markets: can behavioural designs prevent future criminal offences?
Journal of Risk Management in Financial Institutions,
7
(2),
192-201
(2014)
Abstract
This article explores the anatomy of three recent financial scandals and investigates how the legal system has responded to them. Furthermore, it analyses whether behavioural designs can prevent future criminal offenses. The article comes to the conclusion that the social as well as the physical environment can diminish the human propensity to commit a fraud. Moreover, misconduct was often made attractive to fraudsters by means of external rewards. Reforming performance incentives might therefore be an efficient measure to reduce deception in financial markets.
Keywords: cheating; fraud; behavioural designs; Bernard Madoff; Kweku Adoboli; LIBOR scandal
The full article is available to subscribers to the journal.
Author's Biography
Lars Hornuf is a postdoctoral researcher at the University of Munich. He holds an MA in Political Economy from the University of Essex and a PHD in Economics from the University of Munich. Lars is a Certified Exchange Trader (Frankfurt Stock Exchange). Moreover, he was a Visiting Scholar at UC Berkeley in 2010 and Stanford Law School in 2012. Currently, he is a Visiting Research Fellow at the Social Science Research Institute of Duke University. Prior to this Lars had worked for Deutsche Bank, the Ifo Institute for Economic Research and the Institute for International Law. His research interests include law and finance, empirical legal studies as well as behavioural economics. Lars is a founding partner of the law and economics consultancy Academicon.
Georg Haas is a research assistant at the University of Munich.
Citation
Hornuf, Lars and Haas, Georg (2014, March 1). Regulating fraud in financial markets: can behavioural designs prevent future criminal offences?. In the Journal of Risk Management in Financial Institutions, Volume 7, Issue 2. https://doi.org/10.69554/FPUW9133.
© Henry Stewart
Publications LLP
Publications LLP