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Navigating the Rise in Non-Institutional Digital Fraud: An Experiment with Micro Enterprises in Nigeria

Author

Listed:
  • Michael King

    (Department of Economics, Trinity College Dublin)

  • Daniel Putman

    (University of Pennsylvania Center for Social Norms and Behavioral Dynamics)

  • Shane Byrne

    (Department of Economics, Trinity College Dublin)

  • Chaning Jang

    (Busara Center for Behavioral Economics)

Abstract

The high prevalence of digital financial fraud stresses businesses' ability to distinguish between real communications from digital financial service (DFS) providers and fraudulent impersonations. Besides the financial and psychological costs to businesses, fraud may erode trust in, and usage of DFS. We test two strategies for preventing non-institutional fraud: a series of anti-fraud learning interventions and a technical solution to authenticate inbound communications from a digital platform. Using a pre-registered behavioural laboratory experiment in Nigeria, we find evidence that timely educational interventions increased trust in DFS, its likely future usage, and improved knowledge about fraud four weeks post intervention. However, when we task micro business owners with evaluating the authenticity of a series of fictionalised scenarios, we do not find evidence of improvement in fraud detection, either overall, or when considering only genuine or fraudulent scenarios. Surprisingly, we find increased self-confidence in fraud detection ability, highlighting the risk of overconfidence.

Suggested Citation

  • Michael King & Daniel Putman & Shane Byrne & Chaning Jang, 2024. "Navigating the Rise in Non-Institutional Digital Fraud: An Experiment with Micro Enterprises in Nigeria," Trinity Economics Papers tep1124, Trinity College Dublin, Department of Economics, revised Jan 2025.
    • Handle: RePEc:tcd:tcduee:tep1224
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    File URL: https://www.tcd.ie/Economics/TEP/2024/TEP1224.pdf
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    More about this item

    Keywords

    Financial Behavior; Digital Finance; Fraud; Trust; Consumer Protection; Financial Inclusion; Financial Development;
    All these keywords.

    JEL classification:

    • D18 - Microeconomics - - Household Behavior - - - Consumer Protection
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • G53 - Financial Economics - - Household Finance - - - Financial Literacy
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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