Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/258205 
Year of Publication: 
2021
Citation: 
[Journal:] Risks [ISSN:] 2227-9091 [Volume:] 9 [Issue:] 6 [Article No.:] 119 [Publisher:] MDPI [Place:] Basel [Year:] 2021 [Pages:] 1-17
Publisher: 
MDPI, Basel
Abstract: 
Fraud is one of the most harmful phenomena, because it leads to collapse of organizations, causes economic downfall of countries, and destroys faith in a country's capital markets. The impact of fraud is complex and has varying degrees depending on political and financial institutional structures of a country. In this paper, we investigate the combined effect of economic and noneconomic variables on fraud using a sample of 41 developed, in transition, and developing European countries. The data cover the period July 2014-December 2020. Panel data techniques of pooled estimation and the dynamic panel data/generalized method of moments (DPD/GMM) is used, keeping in view the endogeneity perspective. Nevertheless, two-way impacts of fixed effect model estimation-cross-sectional and time-based (panel) effects (alternatively)-are used for analyzing the relationship among the given variables, based on Hausman specification test results. Empirical results of panel data extended REM and FEM approaches with country-specific cross-sectional effects showing that political stability, economic freedom, poverty, and GDP significantly affect fraud proliferation. Political stability is appraised to be the most scoring determinant of fraud incidence in a country.
Subjects: 
fraud
corruption
business operational risk
economic freedom
gross domestic product
political stability
poverty
type of governance
inflation
unemployment
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Creative Commons License: 
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Document Type: 
Article
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