This study investigates Spanish financial institutions' (FIs') propensity to amend and rectify errors deriving from complaints that financial services' users file with the Spanish regulator Complaints Service and how this propensity relates to FIs' risk profile. Under the theory that risk management system of a FI includes reputation risk, this study finds that FIs with higher amendment ratio are inefficient, have high liquidity, are highly profitable in the banking business and are sensitive to market risk while FIs that tend to rectify errors have lower loan loss provisions booked and have larger loan portfolios. Both tend to issue a sustainability report. Findings shed light on the risk profile of FIs that consider the reports that regulators issue regarding FIs' customers' complaints and help customers to identify FIs with higher customer orientation.
Website: http://www.arjonline.org/business-and-management/american-research-journal-of-business-and-management/
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