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Determinants of banks' risk exposure to new account fraud - Evidence from Germany

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  • Hartmann-Wendels, Thomas
  • Mählmann, Thomas
  • Versen, Tobias
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    Abstract

    This paper studies empirically the determinants of new account fraud risk within two dimensions: the probability of fraud, and the expected and unexpected (monetary) loss-per-account due to fraud. By fraud risk, we mean the risk that a bank fails to enforce a debt because the identity of the person incurring the debt cannot be ascertained. Using a unique and rich data set of account applicants, provided by a German Internet-only bank, we find that fraud risk is highly sensitive to demographic and socio-economic variables like nationality, gender, marital status, age, occupation, and urbanisation. For example, foreigners are 22.25 times more likely to commit account fraud than Germans, and men are 2.5 times more risky than women.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Banking & Finance.

    Volume (Year): 33 (2009)
    Issue (Month): 2 (February)
    Pages: 347-357

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    Handle: RePEc:eee:jbfina:v:33:y:2009:i:2:p:347-357

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    Web page: http://www.elsevier.com/locate/jbf

    Related research

    Keywords: Account fraud Internet banking Demographics Socio-economic factors;

    References

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