Dimapur: A joint study by researchers from Nagaland University and Pandit Deendayal Upadhyaya Adarsha Mahavidyalaya, Tulungia, has found that announcements of banking frauds triggered sharp negative reactions in the stock market.The trend was more pronounced in public sector banks, which suffered steeper losses than their private sector counterparts, a Nagaland University release said on Thursday.The study highlighted how ownership structure, institutional credibility, and a bank’s size and maturity influenced investor responses when financial misconduct occurs.It 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,” the study stated.This study examined how major banking fraud disclosures affected the share prices of the banks involved. The researchers also examined whether these events had spillover effects on other banks and investigated institutional characteristics that helped banks maintain stock market stability during such crises.The findings were published in BRICS Journal of Economics, 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. They used stock market data from the Bombay Stock Exchange and applied event-study methodology and regression analysis to assess abnormal stock returns around the disclosure of frauds.
