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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

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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  • Hartmann-Wendels, Thomas & Mählmann, Thomas & Versen, Tobias, 2009. "Determinants of banks' risk exposure to new account fraud - Evidence from Germany," Journal of Banking & Finance, Elsevier, vol. 33(2), pages 347-357, February.
    • Handle: RePEc:eee:jbfina:v:33:y:2009:i:2:p:347-357
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    Cited by:

    1. Damian Przekop, 2020. "Feature Engineering for Anti-Fraud Models Based on Anomaly Detection," Central European Journal of Economic Modelling and Econometrics, Central European Journal of Economic Modelling and Econometrics, vol. 12(3), pages 301-316, September.
    2. Pulina, Manuela & Paba, Antonello, 2010. "A discrete choice approach to model credit card fraud," MPRA Paper 20019, University Library of Munich, Germany.
    3. Schlueter, Tobias & Sievers, Soenke & Hartmann-Wendels, Thomas, 2015. "Bank funding stability, pricing strategies and the guidance of depositors," Journal of Banking & Finance, Elsevier, vol. 51(C), pages 43-61.
    4. Bellucci, Andrea & Borisov, Alexander & Zazzaro, Alberto, 2010. "Does gender matter in bank-firm relationships? Evidence from small business lending," Journal of Banking & Finance, Elsevier, vol. 34(12), pages 2968-2984, December.

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