Hidden Risk

Detecting Fraud in Chinese Banks’ Non-performing Loan Data


  • Robert Mayo Concordia College




China, Banking, Non-performing loans, Fraud, Benford distribution


Using self-reported data from banks in mainland China, I apply a technique used in forensic accounting based on Benford’s Law to detect fraudulent manipulation of non-performing loan (NPL) figures.  I find large data anomalies consistent with false reporting in mainland banks that do not appear in an identically structured survey of Hong Kong banks.  A comparison of different types of data from mainland banks shows no statistically significant anomalies in data for total deposits from customers, operating expenses, net interest income, or non-interest income.


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How to Cite

Mayo, R. (2022). Hidden Risk: Detecting Fraud in Chinese Banks’ Non-performing Loan Data. International Journal of Finance & Banking Studies (2147-4486), 11(1), 98–106. https://doi.org/10.20525/ijfbs.v11i1.1550