Hidden Risk
Robert Mayo
International Journal of Finance & Banking Studies · 2022 · Vol. 11 / Issue 1 · 98-106
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Abstract
Using self-reported data from banks in mainland China, I apply a technique used in forensic accounting based on Benford’s Law to detect fraudulent manipulation of non-performing loan (NPL) figures. I find large data anomalies consistent with false reporting in mainland banks that do not appear in an identically structured survey of Hong Kong banks. A comparison of different types of data from mainland banks shows no statistically significant anomalies in data for total deposits from customers, operating expenses, net interest income, or non-interest income.
Keywords: {'name': 'China'}, {'name': 'Banking'}, {'name': 'Non-performing loans'}, {'name': 'Fraud'}, {'name': 'Benford distribution'}
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Robert Mayo
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