The Impact of the Use of Digital Financial Services on Household Victimization by Cyber-Telecom Fraud

While digital finance has made financial services more accessible, it has also increased the risk of personal information leakage, which may make households more vulnerable to cyber-telecom fraud. Using data from the 2015 China Household Finance Survey (CHFS), this paper investigates the impact of the use of digital financial services on household victimization by cyber-telecom fraud. This paper finds that the use of digital financial services significantly heightens the risk of households falling victim to cyber-telecom fraud, as evidenced by an increased likelihood of encountering such fraud, experiencing financial losses and suffering greater monetary losses as a result. The sub-dimensional analyses show that using digital payments increases the risk of households falling victim to cyber-telecom fraud, and engaging in digital wealth management increases the likelihood of households experiencing cyber-telecom fraud losses and the amount of money lost. Further interactive analysis shows that financial literacy moderates the situation. Specifically, as households’ level of financial literacy increases, the likelihood of encountering cyber-telecom fraud through digital finance, experiencing related losses and the amount of losses incurred decreases. After overcoming the endogeneity problem and performing robustness tests, the conclusions remain consistent.