FRAUDULENT PRACTICES IN THE BANKING INDUSTRY: CAUSES AND SOLUTIONS
Need help with a related project topic or New topic? Send Us Your Topic
DOWNLOAD THE COMPLETE PROJECT MATERIAL
FRAUDULENT PRACTICES IN THE BANKING INDUSTRY: CAUSES AND SOLUTIONS
ABSTRACT OF FRAUDULENT BANKING PRACTISES: CAUSES AND POSSIBLE REMEDIES
There are numerous challenges that this study project faces. Bank officers were quite hesitant to provide useful information about this project. There is also the cost of study and the restricted time available for data collecting, analysis, and accurate interpretation.
The researcher makes an effort to personally visit all of the locations where the above secondary and primary data were found.
Personal effort was also expended in locating important information for the project.
The researcher identified statistical data on members of staff involved in frauds and forgeries, returns of commercial and merchant banks on frauds and forgeries, and so on after thoroughly analysing the available data.
Accidents can happen even in the most well-regulated home, as experience has proven.
Bank employees should be thoroughly checked before being hired, and enough financial education should be provided to bank customers.
CHAPTER ONE OF THE BANKING INDUSTRY’S FRAUDULENT PRACTISES: CAUSES AND POSSIBLE SOLUTIONS
1.1 INTRODUCTION TO THE STUDY
Fraud is defined as a deliberate, premeditated conduct by an individual or group of individuals with the goal of changing the truth or fact for selfish personal monetary advantage. It entails the use of deception and trickery, as well as highly sophisticated cunning and know-how. Forgery, falsification of documents, forgery of signatures, and blatant stealing are typical actions.
Employees and clients of companies in various industries commit fraud all around the world. Although the presence of fraud in our banks is not an unusual or unexpected occurrence, it is concerning since, of all the issues plaguing the Nigerian banking industry, fraud is certainly the most difficult to resolve.
The banking industry is increasingly concerned about fraud because of the clear negative implications of the activities on health and the viability of the institutions.
Bank fraud almost invariably results in the loss of money – money that would normally belong to someone other than the banks. This loss reduces the amount of resources available for use in bank activities in some instances.
According to the Nigeria Deposit Insurance Corporation (NDIC) annual report (2002), 797 incidences of fraud were reported in commercial banks, with a total value of N12,919.55 billion involved.
In extreme circumstances, if fraud occurs with crippling frequency and in large quantities, the bank may be forced to close. Customers lose money when a bank loses money and is forced to close. This results in a loss of trust in banks and decreased patronage. In our financial climate, where banking habits are encouraged to form, this might be a big setback for the efforts.
Fraudulent practises in the Nigerian banking industry are thus of particular interest to monetary control and supervisory authorities, which are responsible for the safety of individual banks as well as the soundness of the banking industry.
1.2 STATEMENT OF THE PROBLEM
Banks rely on public confidence and faith in their capacity to provide when and where it is needed. The urge to get rich quickly in order to feel significant pervades Nigerian society, as Nigerians believe that wealth is a measure of power and status. It is in recognition of this fact that these “get rich quick” oriented individuals turn their focus to bank fraud.
The frequent occurrence of frauds eventually diverts management’s attention and leads to increasing operating costs. Time and energy that might have been spent improving customer service would be diverted to fraud prevention. Money that would have gone towards service improvement efforts would instead be used to establish fraud control procedures and systems.
Furthermore, according to the Nigerian Insurers Association (NIA) 2003 annual report, 23 banks lost N333.3 million to theft and fraud in 2003.
Another reason that the banking business, like any other, is concerned about fraud is that it varies greatly in its nature, character, and methods.
There are two major sources of bank fraud. Sources both internal and external. Though distinct in theory, these sources are frequently indistinguishable in practise. That is to say, a successful event frequently occurs and succeeds as a result of inadvertent or unintentional collaboration (i.e., due to the negligence or error of judgement of an insider – bank employee).
Indeed, it was recently said that “the public believes, and rightly so, that most bank frauds are committed with the active cooperation of bank staff.” Otherwise, how could anyone explain, for example, how a cheque made out to the Federal Government of Nigeria gets deposited into a private account and money are withdrawn?
How, for example, can one explain how a draught created in the name of one institution or individual is collected by another institution or individual?
Fraud has resulted in massive financial losses, the collapse of several banks, and, as a result, unemployment and other problems.
As a result, this study is troubled by the acute difficulty of determining the origin and source of fraudulent practises in the banking business.
1.3 PURPOSE AND OBJECTIVE OF THE STUDY
The following are the study’s objectives:
To ascertain the extent and significance of Nigerians’ involvement in fraudulent practises.
To assess the repercussions of fraud in the financial industry and the economy as a whole.
To find strategies to detect and prevent fraud in our financial institutions.
To make recommendations for measures to reduce fraud.
1.4 QUESTIONS RELATED TO RESEARCH
i. How can bank employees assist in the prevention of fraud?
ii. What methods are there for detecting fraud?
iii. What motivates people to commit fraud?
iv. Is it possible to reduce fraudulent practises?
1.5 RESEARCH HYPOTHESIS
1. Ho: Nigerians are not deceptive because of the economy.
situation.
Hi: Nigerians are deceptive as a result of the country’s economic position.
2. Ho: Most bank frauds are not the result of poor management.
lapses.
Hi: The majority of bank frauds are the result of managerial mistakes.
3. Ho: The borrowed character of Nigeria’s banking system is not acceptable.
capable of instilling dishonest tendencies.
Ho: The borrowed nature of Nigeria’s financial system has the potential to introduce fraudulent tendencies.
1.6 THE IMPORTANCE OF THE STUDY
This research will be notable in the following ways:
a. It is significant to Nigerian banks in terms of the scope of fraudulent activity.
b. It is significant for the depositors.
c. It is important to investors, shareholders, and other stakeholders.
d. It is important to supervisory bodies such as the CBN and the NDIC.
d. It is important for banks to have effective internal controls.
1.8 DEFINITION OF THE TERM
Fraud is defined as an act or process of deception directed against another. In legal terms, fraud is the dishonest deprivation of something that a person is or might be entitled to but for the perpetration of fraud.
Furthermore, fraud can be defined as a deliberate, premeditated activity by an individual or group of individuals with the goal of changing the truth or fact for selfish personal monetary advantage. It entails the use of deception and trickery, as well as highly sophisticated cunning and know-how.
According to Gerald Klein (1995), a dictionary of banking, fraudulent is engaging in fraud in order to deceive creditors and defeat or delay them.
While practise is something that is done frequently. It is something that individuals do frequently, especially in a specific style.
Fraudulent practises: techniques through which people engage in an act or course of deception aiming at the harm of another.
Need help with a related project topic or New topic? Send Us Your Topic