Libor benchmark: practice, crime and reforms

Abstract

Purpose

The purpose of this paper is to trace how and why the market-designed Libor benchmark turned bad, thereby necessitating a regulatory response.

Design/methodology/approach

The study relies on primary and secondary data in the public domain and complemented by a single-case study.

Findings

The study demonstrates how and why Libor benchmark rigging led to reforms in the UK and elsewhere.

Research limitations/implications

The study relying mainly on the secondary data analysis needs to be enhanced by further empirical-based studies.

Practical implications

Insights generated by the study suggest why it might not be worthwhile for market participants to game the system.

Social implications

Libor benchmark affects the financial system widely with varying significance to the wider public. With better regulatory oversight, its negative impact is expected to be mitigated considerably.

Originality/value

The seriousness with which the enforcement agency and judiciary now treat financial crime weakens the earlier public perception that white-collar crime is enforced differently.

Citation

Yeoh, P. (2016), "Libor benchmark: practice, crime and reforms", Journal of Financial Crime, Vol. 23 No. 4, pp. 1140-1153. https://doi.org/10.1108/JFC-09-2015-0044