Motive Analysis Of The LIBOR Manipulation Event And Research On The Financial Regulation

In June 2012, it was revealed that he London Interbank Offered Rate (LIBOR) was illegally manipulated by Barclays Bank. After the manipulation scandal was exposed, soon a series of more serious manipulation events in global financial markets came to light and produced intense echo socially. It was completely exposed that the financial supervision could be in a vulnerable position.This thesis combines theoretical analysis with empirical analysis, bases on historical data, to analyze the dynamic relationship between LIBOR and other benchmark interest rate. Then this thesis analyzes the development of LIBOR from the theoretical point of view, finds that the function of LIBOR has changed step by step and digs out the reasons which caused this short-term financial benchmark in manipulation by some large financial institutions. Finally, the thesis lists and analyzes the international financial reform measures after the LIBOR manipulation events, and puts forward a series of policy suggestions for the development of China’s financial institutions.This thesis is divided into five parts. The first section is an introduction, including the research background and the significance of research. Since 2012, LIBOR manipulation scandal exposed, a number of global commercial banks such as Barclays Bank, UBS and other financial regulators are subjected to the investigation. The second section analyzes the relationship between LIBOR and the federal funds rate, which bases on historical data. The third section analyzes the dynamic relationship between LIBOR and the federal funds rate, in order to prove that the Bank of Barclays and the other quote lines manipulate LIBOR as a cartel group. In addition, this part also describes how much the financial derivatives that the investment banking sector held in the LIBOR manipulation period. The fourth section bases on the theory of conflict of interest and behavior finance theory to analyze the reasons of LIBOR manipulation. This part introduces the development and current situation of the financial institutions, and expounds the integration background in the financial industry, the function of LIBOR has changed because of the conflict of interest in the financial industry. In the fifth part, the thesis analyzes the financial regulatory reform of the United States regulatory authorities to ease the conflicts of interest in the financial management, and expounds the phenomenon of the conflicts of interest under the trend of financial integration, and puts forward a series of the policy recommendations on the reform of financial supervision.This thesis including the quantitative and qualitative analysis, finds that in the subprime mortgage crisis, the relationship between LIBOR and the federal funds rate changed. Before the crisis came to light, the two rates had a high positive correlation coefficient, but in the crisis the relationship has changed into alternating positive and negative correlation coefficient frequently. The reason caused the changes of the dynamic relationship is the changes of the function of LIBOR and the globalization of the financial institution’s integrated management. Due to the development of the financial market, the function of LIBOR has gradually changed, from the reliable estimation for the initial internal syndicate interest cost to the financial benchmark which is controlled by the business department in comprehensive financial institutions for the reason of conflict of interest.