Engels, C. and Kumar, K. and Philip, D. (2020) 'Financial literacy and fraud detection.', The European journal of finance., 26 (4-5). pp. 420-442.
Who is better at detecting fraud? This paper finds that more financially knowledgeable individuals have a higher propensity to detect fraud: a one standard deviation increase in financial knowledge increases fraud detection probabilities by 3 percentage points. The result is not driven by individuals' higher financial product usage and is observed to be moderated by individuals' low subjective well-being, effectively depleting skills to detect fraud. Interestingly, prudent financial behavior relating to basic money management is found to have negligible effects for detecting fraud. The findings attest to the fact that fraud tactics are increasingly complex and it is greater financial knowledge rather than basic money management skills that provides the degree of sophistication necessary to detect fraud. The paper draws policy implications for consumer education programs to go beyond cultivating money management skills, and provide advanced financial knowledge necessary for tackling fraud.
|Full text:||(AM) Accepted Manuscript|
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|Publisher Web site:||https://doi.org/10.1080/1351847X.2019.1646666|
|Publisher statement:||This is an Accepted Manuscript of an article published by Taylor & Francis in The European Journal of Finance on 28 July 2019 available online: http://www.tandfonline.com/10.1080/1351847X.2019.1646666|
|Date accepted:||10 July 2019|
|Date deposited:||11 July 2019|
|Date of first online publication:||28 July 2019|
|Date first made open access:||28 January 2021|
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