An Intelligent Financial Fraud Detection Support System Based on Three-Level Relationship Penetration

Xiang Li, Lei Chu (), Yujun Li (), Zhanjun Xing, Fengqian Ding, Jintao Li and Ben Ma
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Xiang Li: Smart State Governance Laboratory, Shandong University, Qingdao 266237, China
Lei Chu: Smart State Governance Laboratory, Shandong University, Qingdao 266237, China
Yujun Li: Smart State Governance Laboratory, Shandong University, Qingdao 266237, China
Zhanjun Xing: Smart State Governance Laboratory, Shandong University, Qingdao 266237, China
Fengqian Ding: School of Information Science and Engineering, Shandong University, Qingdao 266237, China
Jintao Li: Smart State Governance Laboratory, Shandong University, Qingdao 266237, China
Ben Ma: Smart State Governance Laboratory, Shandong University, Qingdao 266237, China

Mathematics, 2024, vol. 12, issue 14, 1-23

Abstract: Financial fraud is a serious challenge in a rapidly evolving digital economy that places increasing demands on detection systems. However, traditional methods are often limited by the dimensional information of the corporations themselves and are insufficient to deal with the complexity and dynamics of modern financial fraud. This study introduces a novel intelligent financial fraud detection support system, leveraging a three-level relationship penetration (3-LRP) method to decode complex fraudulent networks and enhance prediction accuracy, by integrating the fuzzy rough density-based feature selection (FRDFS) methodology, which optimizes feature screening in noisy financial environments, together with the fuzzy deterministic soft voting (FDSV) method that combines transformer-based deep tabular networks with conventional machine learning classifiers. The integration of FRDFS optimizes feature selection, significantly improving the system’s reliability and performance. An empirical analysis, using a real financial dataset from Chinese small and medium-sized enterprises (SMEs), demonstrates the effectiveness of our proposed method. This research enriches the financial fraud detection literature and provides practical insights for risk management professionals, introducing a comprehensive framework for early warning and proactive risk management in digital finance.

Keywords: financial fraud detection; enterprise financial risks; three-level relationship penetration; fuzzy deterministic soft voting (search for similar items in EconPapers)
JEL-codes: C (search for similar items in EconPapers)
Date: 2024
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