Mapping the individual and structural theories of financial crimes

Mark Eshwar Lokanan and Indy Aujla

Journal of Financial Crime, 2020, vol. 28, issue 2, 420-432

Abstract: Purpose - The purpose of this paper is to argue for an integrated explanation of financial fraud. Greater emphasis must be placed on the structural and situational factors that are the elements of fraud risks and fraud. Design/methodology/approach - The paper is based on a review of the literature on the explanation of financial fraud. Both micro- and macro-theoretical explanations of fraud were analysed to allow for a broader picture of the types of individuals that were involved in fraud, the rules governing their conduct and the types of law they broke. Findings - The main reason why people commit fraud is that their crime propensity interacts with the elements present in criminogenic environments. Indeed, because most of the research on structural theories of fraud focuses on general criminality, not much has been done in the area of financial fraud. More research needs to be carried out to excavate the subterranean cluster of narrative on fraud risks and fraud. Research limitations/implications - To address the future contingency of fraud risks, the paper adopted a similar position of prior accounting research on financial crimes. The structural explanation of fraudulent behaviour considers individuals’ actions to be less the result of individual deviance and more the cause of societal forces. Structural theories take into consideration the individual psychology of the offenders and position it to reflect the various realities – institutional, structural and cultural life – they are caught up in. Future research must endeavour to address these concerns. Originality/value - The manuscript is among a new stream of literature that addresses the structural elements of financial fraud.

Keywords: Financial crimes; Fraud; Psychological theories; Structural theories (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jfcpps:jfc-12-2019-0165

DOI: 10.1108/JFC-12-2019-0165

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