The purpose of this paper is to assess the government efforts in criminalising and combating bank fraud and corruption in China and their policy implications.
An integrated method is used to gather the data for this study, including government documents, statutes, congressional reports, legal cases, news reports, online survey and interviews with key policy‐makers, investigators and prosecutors.
This research finds that a major problem of bank fraud and corruption in China is the gigantic web of government officials, bank insiders and criminal businesses in committing fraud. The harshness of the Chinese law has not automatically resulted in making the struggle against bank fraud more effective. Law, enforcement and punishment are not certain, predictable, and applied consistently in order to deter fraud. Political, ideological and legal differences have hindered China's pursuit of escaped criminals in foreign countries.
This paper indicates that a three‐pronged approach – deterrence, prevention and education – is needed to address bank fraud and corruption. The industry's preventive efforts are of far greater importance than any extreme penalty. There is a need for a reconstruction of business ethics to ensure willing compliance with the law by individuals and organizations.
The paper is of value to law enforcement policy‐makers, banking regulators, financial institutions and academic researchers with interests in bank fraud and corruption issues.
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