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The Architecture of Illegal MarketsTowards an Economic Sociology of Illegality in the Economy$
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Jens Beckert and Matías Dewey

Print publication date: 2017

Print ISBN-13: 9780198794974

Published to Oxford Scholarship Online: August 2017

DOI: 10.1093/oso/9780198794974.001.0001

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The Price Is Not Right

The Price Is Not Right

Financialization and Financial Crime

Chapter:
(p.286) 15 The Price Is Not Right
Source:
The Architecture of Illegal Markets
Author(s):

Robert Tillman

Publisher:
Oxford University Press
DOI:10.1093/oso/9780198794974.003.0015

This chapter presents the argument that financialization, as a broad economic trend, has increased the opportunities for financial crime among firms both within and outside the financial services industry. The growth of the financial services industry, increasing dependence of many economies on financial services, increasing focus on share value by firms, and dramatic increases in compensation within the financial services industry have all contributed to increases in the frequency and scale of financial crime in recent years. To illustrate these trends, three case studies are reviewed: (1) the manipulation of electrical energy prices by investment bank subsidiaries; (2) the deliberate rigging of the London Interbank Offered Rate (Libor); and (3) the fixing of foreign exchange rates by investment bank traders. The case studies involve efforts by financial industry insiders to profit by manipulating the infrastructure of those markets, tinkering with the mechanisms by which prices and rates are set.

Keywords:   financial crime, financialization, financial services industry, market devices, criminogenic tendencies, Libor, foreign exchange

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