Friday, June 2, 2023

Telecommuting bankers have fewer alerts of misconduct

A new study on a UK bank has found that working from home significantly reduces the frequency with which its bankers report financial misconduct and initiate investigations.

In a paper published late last month by the Social Science Research Network, researchers note that they compared bankers at one of the five largest UK banks who worked in the office and who took office between March 2020 and 2021. Worked from home.

“Our prevalence analysis shows that working from home reduces the likelihood of stock misconduct; finally, those who work from home file fewer misconduct notices,” reads the paper summary. “The economic significance of these results is considerable.”

The authors of the article state that the new realities of working from home bring many new factors to the potential commission of misconduct, such as less direct supervision by supervisors.

However, they claim that the lack of oversight is offset by less exposure to co-workers who may be guilty of their own wrongdoings, as well as less information that can lead to situations such as insider trading or collusion. Thus, taken together, working from home may not represent a significantly higher or lower potential for misconduct.

“Working from home leads to an absolute reduction of 14.7 percentage points in the annual likelihood of an alert (misconduct complaint) per employee working in the stock market,” the document states.

According to the study data, during the pandemic, employees working from home had a 7.3% annual chance of triggering an alert, while those working in an office had a 37.6% chance of triggering an alert.

Noting that misconduct in securities trading can result in significant financial penalties, the authors state that working from home can have a positive financial impact on a bank, in addition to the already documented benefits it provides the company. , such as improving staff morale and reducing office costs.

The researchers analyzed how many “alerts” the employees generated, which were broken down into two groups for the bank: communication alerts, which flag potential problems in employees’ emails and online chats with their peers, and Trading alerts that indicate a violation. Specific who are engaged in securities negotiation.

Before the pandemic, the researchers calculated that over the course of a typical year – about 220 work days – an office worker had a 35.6% chance of generating at least one alert.

The group of workers who chose to work from home, about 53% of total employees in the sample (86 worked from home versus 76 in the office), were also less likely to trigger an alert before the pandemic. The researchers say the bank did not say whether it intentionally selected low-alert employees to work from home, but they concluded it may have played a role in who was allowed to work from home.

Nation World News Desk
Nation World News Desk
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