Matthias Pelster What Is the Impact of Financial Penalties on the Performance and Stock Returns of Banks?

Matthias Pelster is Professor of Finance at Paderborn University. He has previously held research positions at New York University, Leuphana University of Lüneburg and TU Dortmund. His research focuses on behavioral finance, risk management, and corporate finance.

Area of Research

Behavioral Finance, Risk Management, Corporate Finance

since 2020

Professor for Finance

University of Paderborn (Universität Paderborn)

2019-2020

Visiting Research Professor

Stern School of Business, New York University

2017-2020

Assistant Professor

University of Paderborn (Universität Paderborn)

2014-2017

Assistant Professor

Leuphana University, Lüneburg

Institute of Finance and Accounting

2013-2014

Post-doctoral Researcher

TU Dortmund University (Technische Universität Dortmund)

Chair of Finance

2009-2013

Research and Teaching Fellow

TU Dortmund University (Technische Universität Dortmund)

Chair of Finance

2019

Habilitation

University of Paderborn (Universität Paderborn)

Field of Expertise: Business Administration

2009-2013

Ph.D. in Finance

TU Dortmund University (Technische Universität Dortmund)

Chair for Finance, summa cum laude

2003-2009

Diploma in Mathematics and Business Administration

TU Dortmund University (Technische Universität Dortmund)

- Journal of Banking & Finance

- Journal of Risk and Insurance

- Journal of Empirical Finance

- Journal of Economic Behavior & Organization

- Journal of Behavioral and Experimental Finance

- German Finance Association

- European Finance Association

- American Finance Association

- Financial Management Association

Prizes

- Best Paper Award, European Academy of Management Annual Conference (2019)

- Dean’s Young Scholar Research Award, Faculty of Business Administration and Economics, Paderborn University (2019)

- Academy of Science and Art NRW, Shortlisted for the “Junge Kolleg” (2018)

- Heinz Sauermann Advancement Award for Experimental Economic Research (2018)

Fellowships

- Berkley Fellowship: St. John’s School of Risk Management, The Peter J. Tobin College of Business, St. John’s University (2017)

- Project: “Managerial personality traits and selective hedging”, The Frankfurt Institute for Risk Management and Regulation (FIRM), (2020)

- DFG: Project “Social interactions and (financial) decision-making” (2020)

- Project: “Attention triggers and retail investor trading”, Fritz Thyssen Stiftung (2019)

- Project: “Social Trading and the Wisdom of the Crowd”, Fritz Thyssen Stiftung (2016 - 2017)

Opinions on the impact of financial penalties on the profitability of banks are divided: One view argues that they obstruct the functioning of the banking sector; another one says that these penalties are simply another cost of doing business. MATTHIAS PELSTER and his research group have investigated the impact of penalties on the performance of banks in an empirical study in order to properly differentiate between the competing opinions. They examined the profitability and the stock returns of a sample of large internationally listed banks that were imposed with financial penalties. They found that there is a negative relation between penalties and pre-tax profitability and a lower income in the years following the penalty. However, taking a look at the stock performance of these banks, they could detect a positive relation of the stock returns to the announcement of penalties.

LT Video Publication DOI: https://doi.org/10.21036/LTPUB10564

Financial Penalties and Bank Performance

  • Hannes Köster and Matthias Pelster
  • Journal of Banking and Finance
  • Published in 2017
Hannes Köster and Matthias Pelster. "Financial Penalties and Bank Performance." Journal of Banking and Finance 79 (2017): 57-73.