The Profiles of Occupational Fraudsters in the Korean Banking Industry and Its Implications for Financial Security

Abstract

Financial institutions, such as banks and credit unions that handle customer savings and loans, are at risk of occupational fraud and corruption, such as embezzlement of assets and accounting fraud by internal executives and employees. The Korean financial industry can be divided into the first financial sector, which consists of major commercial banks, and the second financial sector, which consists of small-scale lending institutions such as credit unions. This study collected 53 cases of occupational corruption in the domestic financial industry that were actually investigated by the police and analyzed the profiles of occupational fraudsters. The chi-square independent test was conducted using the main independent variables as the perpetrator's gender, position, and whether the violator was employed in the first or second financial sector. As a result of the analysis, it was found that male workers were more significantly related to loan-related corruption than female workers, and higher-ranking workers than lower-ranking workers. In addition, it was discovered that high-ranking employees' occupational fraud and corruption occurred more frequently in the second financial sector than in the first sector. The profile of occupational fraudsters and statistical analysis shown in this study can give important implications in terms of fraud risk management in order to prevent loan-related corruption that may occur in the Korean financial sector.