Framework for Enhancing Financial Stability in SMEs: The Role of Effective Financial Fraud Prevention Strategies
DOI:
https://doi.org/10.37231/jmtp.2025.6.2.467Keywords:
Financial Stability, Financial Fraud, SME'sAbstract
This study seeks to identify key factors that contribute to enhanced financial stability (FS) in Small Medium Enterprises (SMEs) by examining the roles of employee training and awareness programs on fraud (ETAPF), fraud detection systems (FDS), internal control mechanisms for fraud prevention (ICMFP), collaboration with government and financial institutions on fraud prevention (CGFIFP), and compliance with legal and regulatory frameworks related to fraud (CLRFRF). This research aims to explore the impact of various financial fraud prevention strategies on the financial stability (FS) of SMEs in Peninsular Malaysia. The analysis focuses on how ETAPF can improve employees' ability to identify and respond to fraudulent activities. Additionally, the effectiveness of FDS in detecting and preventing fraud incidents is evaluated. The study also investigates the implementation of ICMFP within SMEs. Furthermore, the impact of CGFIFP is assessed, illustrating how collaboration enhances the overall fraud prevention framework and supports FS. Lastly, the study examines CLRFRF, emphasizing the necessity of adhering to legal and regulatory standards to ensure comprehensive fraud prevention and robust FS. This study underscores the critical role that comprehensive financial fraud prevention strategies play in enhancing the financial stability of SMEs in Peninsular Malaysia. The findings of this study are summarized in four key explanations, highlighting the multifaceted approach required to safeguard SMEs from financial fraud and promote their long-term sustainability. The contributions of this research provide valuable insights for SMEs, policymakers, and stakeholders, offering practical recommendations to enhance FS through effective fraud prevention strategies.
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