EFFECT OF FRAUD IN BANK SECTOR IN NIGERIA
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EFFECT OF FRAUD IN BANK SECTOR IN NIGERIA
1.1 INTRODUCTION TO CHAPTER ONE
The level of fraud in modern-day Nigeria is extremely high. It has infiltrated every element of our lives and economy to the point where a three-year-old toddler speaks of Advance Fee Fraud Scheme (419). The economy is currently facing a number of issues as a result of the billions of naira lost owing to the dreadful Monster (fraud). Different authors have defined the term “fraud” in various ways.
The following researchers and specialists provide perspectives on fraud for the sake of this study. According to the Oxford Advanced Learner’s Dictionary, fraud is criminal deception. According to Fagbemi (1986), it is the act of depriving a person dishonestly of something that is his.
In its lexical definition, fraud is an act or course of deception committed with the intent of gaining an unlawful or unfair benefit; deception directed against another. FITC stands for Financial Institution Training Centre.
According to Helicon (2000), “fraud in law is an act of deception resulting in injury to another.” To be considered a fraud, an activity must have a dishonest intention and be meant to profit the perpetrator at the expense of another person.
According to the concept, fraud in the Nigerian economy cannot be limited to banks alone. Although fraud affects all sectors of the economy, the size of a business usually dictates the amount of fraud committed. Inadequate manpower,
a poor internal control system and internal checks, insufficient incentives and an unsuitable legal framework for dealing with offenders, a downturn in the economy, and recognition being accorded to wealthy people regardless of their source of wealth all play a role in the perpetration of frauds. The current concern is the threat of
Because the diabolical and unscrupulous act will pose to the stability and survival of individual banks, financial institutions, industry performance, and the economy as a whole.
Fraud causes massive financial losses for financial institutions and their consumers, as well as the depletion of shareholder money and capital base, as well as a loss of trust in financial institutions.
1.2 STATEMENT OF PROBLEMS
The challenges of this research will focus around determining the ongoing reasons of bank fraud in almost all banks and other financial organisations, as well as the impact on the economy. Despite the Central Bank of Nigeria’s (CBN) banking reforms and corporate governance,
fraud in Nigerian banks has remained an inescapable problem that has not only grown persistent but has also increased in recent years. This hydra-headed monster (fraud) has had a severe impact on Nigerian banks’ profitability and has destroyed public trust in the banking industry.
Furthermore, the investigation will look into the economic implications of these scams on our international relationships and the global market economy.
1.3 OBJECTIVE OF THE STUDY
The study’s overarching goal is to expose the causes and many forms of bank fraud, as well as the consequences and methods for combating them. The precise goals of this research include the following.
i. To identify the sources of fraud in banks.
ii. To investigate the various types of fraud committed in banking.
iii. To recognise the numerous methods used to cheat banks.
iv. To make recommendations for actions aimed at preventing, managing, and detecting bank fraud.
1.4 RESEARCH QUESTIONS
This study was guided by the following research question:
1. How does a lack of an adequate internal control system contribute to financial fraud?
2. How can a lack of desire or incentive contribute to banking fraud?
3. To what extent do societal values contribute to bank fraud?
4. How can bank frauds contribute to our country’s deteriorating economic fortunes?
1.5 RESEARCH THEORIES
The following assumptions are assumed for the purposes of this study work:
Ho: There is no link between good internal controls and bank fraud.
Hi: Internal control effectiveness and bank fraud are related.
There is no link between motivation or incentive and bank fraud.
Hello, there is a connection between motivation or incentive and bank fraud.
Ho: Societal values have no influence on bank fraud.
Hello, societal values do have an impact on bank fraud.
1.6 SCOPE OF THE RESEARCH
Bank fraud and its impact on our economy are broad issues that can affect both commercial and community banks. The researcher would like to touch on all aspects of banking activities, but due to time and budget constraints, this study concentrates on the problem of frauds in commercial banks, particularly Union Bank of Nigeria Plc Enugu.
Most notably, records publications could be quickly obtained and frauds identified in commercial banks more easily than in other banks. Though the author does touch on fraud in merchant banks, the emphasis is on commercial banks.
1.7 SIGNIFICANCE OF THE STUDY
The importance of this study can be observed in the primary areas of practical and academic significance.
1.7.1 PRACTICAL IMPORTANCE
The research will be useful in gaining a better grasp of the following topics:
v Bank officials/management: it will provide light on critical areas where emphasis should be focused in order to reduce fraud perpetration.
v financial customers will be educated on how to deal with their financial instruments such as cheques, deposit slips, ATM cards, and so on in order to limit the frequency of fraud in the banking business.
Furthermore, this research will contribute in the enactment of legislation that are not only effective but also reveal strategies to reduce social vice fraud.
1.7.2 ACADEMIC IMPORTANCE
The study will be noteworthy from an academic standpoint in the following aspects.
v It will be used as a resource for future research by other scholars.
v It will help to enrich existing literature on the effects of bank fraud in the economy.
v It will propose a method (of interest to academics) for reducing the cankerworm (fraud) in the financial system based on empirical evidence.
and obtaining information required for this investigation will also pose some difficulties.
1.4 DEFINITION OF TERMS
FRAUD:- Frauds are acts of dishonesty, deception, falsification, and manipulation committed for monetary or non-monetary advantage.
INTERNAL CONTROL:- This refers to the entire system of control, financial and otherwise, developed by management in order to carry on the enterprise’s activity in an orderly manner, safeguard its assets, and ensure the correctness and dependability of its records to the greatest extent feasible.
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