Regime-Dependent Sovereign Risk Pricing During the Euro Crisis

Previous work has documented a greater sensitivity of long-term government bond yields to fundamentals in euro area peripheral countries during the euro crisis, but we know little about the driver(s) of regime switches. Our estimates based on a panel smooth threshold regression model quantify and explain them: (1) investors have penalized a deterioration of fundamentals more strongly from 2010 to 2012; (2) the higher the bank credit risk, measured with the premium on credit derivatives, the higher the extra premium on fundamentals; (3) after ECB President Draghi’s speech in July 2012, it took 1 year to restore the noncrisis regime and suppress the extra premiu

The Libor case: a focus on Barclays

The purpose of this chapter is to describe the reputational impact of the Libor case on Barclays by outlining the ensuing process of rebuilding trust and implementing cultural changes. This chapter is organized as follows. First, we briefly describe the major elements of the Libor scandal, including the investigations, fines and regulatory actions. Then, we propose a focus on Barclays, the company that arguably experienced the most significant impact of the media scandal in 2012. In our case study, we describe the course of events that led Barclays into a reputational crisis, identify and describe the core elements of the restructuring concept. In closing, we consider the lessons learned from this series of events