Financial Fraud: A Literature Review

34 Pages Posted: 14 Nov 2018

See all articles by Arjan Reurink

Arjan Reurink

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for the Study of Societies

Date Written: December 2018


This paper describes the empirical universe of financial fraud as it has been documented in the academic literature. Specifically, it describes the different forms of fraudulent behaviour in the context of financial market activities, the prevalence and consequences of such behaviour as identified by previous research, and the economic and market structures that scholars believe facilitate it. To structure the discussion, a conceptual distinction is made between three types of financial fraud: false financial disclosures, financial scams, and financial mis‐selling. The findings of the literature review highlight a number of recent developments that scholars think have facilitated the occurrence of financial fraud, including (1) the development of new fundamental conflicts of interest and perverse incentive structures in the financial industry; (2) an influx of unsophisticated, gullible participants in the financial marketplace; (3) the increasing complexity involved in financial market transactions as a result of rapid technological, legal, and financial innovation and an ever‐widening menu of financial products; (4) an increase in the use of justified secrecy in the form of a mystification of trading models adopted by fund managers.

Keywords: financial fraud, financial misconduct, financial crime, securities fraud, financial statement fraud, financial scams, financial mis‐selling, white‐collar crime

Suggested Citation

Reurink, Arjan, Financial Fraud: A Literature Review (December 2018). Journal of Economic Surveys, Vol. 32, Issue 5, pp. 1292-1325, 2018, Available at SSRN: or

Arjan Reurink (Contact Author)

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for the Study of Societies ( email )

Paulstr. 3
50676 Koln

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