Analysis of cyberfraud in the South African banking industry: a multiple regression approach

Oluwatoyin Esther Akinbowale, Polly Mashigo and Mulatu Fekadu Zerihun

Journal of Financial Crime, 2023, vol. 31, issue 4, 952-973

Abstract: Purpose - The purpose of this study is to analyse cyberfraud in the South African banking industry using a multiple regression approach and develop a predictive model for the estimation and prediction of financial losses due to cyberfraud. Design/methodology/approach - To mitigate the occurrence of cyberfraud, this study uses the multiple regression approach to correlate the relationship between financial loss and cyberfraud activities. The cyberfraud activities in South Africa are classified into three, namely, digital banking application, online and mobile banking fraud. Secondary data that captures the rate of cyberfraud occurrences within these three major categories with their resulting financial losses were used for the multiple regression analysis that was carried out in the Statistical Package for Social Science (SPSS, 2022 environment). Findings - The results obtained indicate that the South African financial institutions still incur significant financial losses due to cyberfraud perpetration. The two main independent variables used to estimate the magnitude of financial loss in the South Africa’s banking industry are online (internet) banking fraud (X2) and mobile banking fraud (X3). Furthermore, a multiple regression model equation was developed for the prediction of financial loss as a function of the two independent variables (X2 andX3). Practical implications - This study adds to the literature on cyberfraud mitigation. The findings may promote the combat against cyberfraud in the South Africa’s financial institutions. It may also assist South Africa’s financial institutions to predict the financial loss that financial institutions can incur over time. It is recommended that South Africa’s financial institutions pay attention to these two key variables and mitigate any associated risks as they are crucial in determining their profitability. Originality/value - Existing literature indicated significant financial losses to cyberfraud perpetration without establishing any relationship between the magnitude of losses incurred and the prevalent forms of cyberfraud. Thus, the novelty of this study lies in the analysis of cyberfraud in the South African banking industry using a multiple regression approach to link financial losses to the perpetration of the prevalent forms of cyberfraud. It also develops a predictive model for the estimation and projection of financial losses.

Keywords: Cyberfraud; Digital banking application; Financial loss; Mobile banking; Multiple regression; Internet banking (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jfcpps:jfc-04-2023-0094

DOI: 10.1108/JFC-04-2023-0094

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