The effects of reducing opportunity and fraud risk factors on the occurrence of occupational fraud in financial institutions

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    Abstract

    Internal fraud has been attributed as one of the contributing factors for serious banking crises. Given that opportunity is the pre-eminent cause of white-collar crime, this study attempts to measure the relationships between the perceived ‘opportunity reduction’ and other fraud risk factors with regard to the ‘likelihood of fraud occurrence’ in financial institutions. For analysis, the study gathered 395 survey responses from South Korean financial sector. The results of logistic regressions of the study highlight that how to operate control mechanisms combining prevention and deterrence measures (the qualitative aspect of internal control), is more important for preventing fraud than the mere existence of many anti-fraud controls. In addition, the study discovers that the employees of the Korean financial institutions view that the risk of management override of controls is a more critical risk than collusion in their organization.
    Original languageEnglish
    Pages (from-to)79-88
    JournalInternational Journal of Law, Crime and Justice
    Volume56
    Early online date24 Jan 2019
    DOIs
    Publication statusPublished - Mar 2019

    Keywords

    • collusion
    • opportunity
    • occupational fraud
    • management override
    • fraud risk
    • financial institution

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