Social Sciences in China, 2025

Vol. 46, No. 2, 2025

How Do Banks Protect Customers from Online Fraud? A Study on Social Function

(Abstract)

Dong Yan, Yan Jiajia, Dong Mengyao and Tan Suhang

This paper examines the role of commercial banks in mitigating online fraud by employing a panel two-way fixed effects model, utilizing judicial data from the China Judgment Online and branch data released by the China Banking and Insurance Regulatory Commission. The study finds that an increase in the density of physical bank branches helps reduce the incidence of online fraud in regions. In the verification of micro-mechanisms, it is found that bank branches play a role in promoting financial knowledge. The impact of bank branches on online fraud demonstrates heterogeneity, with state-owned banks and rural commercial banks showing more significant crime prevention capabilities. Bank branches in provincial capitals are more effective in preventing online fraud. Additionally, this effect is influenced by the internal governance level of bank branches and the degree of digital financial development in cities.

Keywords: bank branches, online fraud, internal governance, digital finance