States » EastPosted at: Oct 22 2026 7:18PM


Study finds banking fraud hits public sector bank stocks harder

Dimapur, Oct 22 (UNI) A joint study by Nagaland University and Pandit Deendayal Upadhyaya Adarsha Mahavidyalaya Tulungia researchers found that major banking fraud announcements led to major negative stock market reactions.
It noted that this trend was more pronounced with public sector banks, which experienced sharper losses than their private sector counterparts, a Nagaland University release said on Thursday.
The findings highlighted how ownership structure, institutional credibility, and a bank's size and maturity strongly influenced investor responses when financial misconduct occurs.
The study said financial fraud and unethical practices continue to occur despite regulatory reforms and oversight mechanisms.
“Such incidents can affect not only a bank’s financial performance but also shareholder wealth and confidence in the wider financial system,” it stated.
This study examined how major banking fraud disclosures affected the share prices of banks involved. The researchers also examined whether these events spilled over to other banks and investigated institutional characteristics that help banks maintain stock market stability during such crises.
The findings were published in BRICS Journal of Economics (https://doi.org/10.3897/brics-econ.7.e183393), a peer-reviewed, open-access journal published by Lomonosov Moscow State University, focusing on economic development, financial systems, global economic processes and the economic dimensions of BRICS cooperation.
The paper was co-authored by Prof. Joy Das from Nagaland University and Dr Mahesh Dahal from Pandit Deendayal Upadhyaya Adarsha Mahavidyalaya Tulungia, Assam.
The researchers analysed four major banking fraud cases involving IDBI Bank, Punjab National Bank, Bank of India and Canara Bank.
The team used stock market data from the Bombay Stock Exchange (BSE) and applied event study methodology and regression analysis to assess abnormal stock returns around the disclosure of frauds.
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