CRITICAL ANALYSIS OF FRAUD IN NIGERIAN FINANCIAL INSTITUTION
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CRITICAL ANALYSIS OF FRAUD IN NIGERIAN FINANCIAL INSTITUTION
INTRODUCTION
1.1 STATEMENT OF THE PROBLEM
Initially, fraud (i.e., a purposeful attempt to unlawfully take financial benefit of a person) was the troublesome phrase impeding the correct functioning or operation of a bank.
According to bank inspectors and auditors, the whole consequence or risk impact of fraud in the Nigerian economy is a decline in economic growth and development (Okechukwu 2004).
Furthermore, it had created unthinkable agony to Nigerian banks, particularly new generation banks. This has a significant detrimental impact on bank performance.
However, the major implication of fraud on Nigerian banks that the researcher will explore is its negative impact on these three concepts: liquidity adequacy, profitability, and customer and bank relationships.
1.2 OBJECTIVE OF THE STUDY:
Amels (1993) defined financial distress as “a condition when the banking system as a whole has negative capital and current profit is insufficient to cover losses to such an extent that the banking system is unable to general internally positive capital.”
It has a negative influence on bank capital, and current profits are insufficient to cover losses as well as general positive capital. (profitability argument), the bank will then be technically bankrupt (liquidity reason).
However, many operators and financial institution monitors are aware that not all is right with a number of operating institutions (for client / bank reasons).
Nobody needs convincing that the system is uncomfortable and that some of its members are distressed and theoretically insolvent, while others are unsound. This poor performance discourages depositors and investors from making additional deposits or inflows.
Finally, this motivates the researcher to regard these three determinant cores as an important idea to investigate.
1.3 THE SIGNIFICANCE OF THE STUDY:
The concept will benefit the following Nigerian fields or sectors.
(a) Bank: First and foremost, banks must maintain their liquidity levels in order to meet depositor demand.
(b) Customer: It maintains customers’ and the public’s faith and trust in the bank through prudent liquidity management and, on the other hand, in service, relationships, and so on.
(c) Banking policy / rule: If these three concepts are effectively managed, banks will be able to meet C.B.N requirements. Such as an especial deposit, a legally mandated percentage, and so forth.
(d) Nigeria Economy: It will improve the Nigerian economy due to the earnings earned by Nigeria banks and client investments in the banks. As an example, consider becoming a shareholder, but first consider the bank’s profitability and liquidity level.
1.4 DEFINITION OF TERMS
1. SATISFACTION WITH LIQUIDITY
This metric measures a bank’s capacity to meet its short-term debts as they come due. For instance, meeting client demand.
2. CAPABILITY FOR PROFITABILITY:
This notion measures the amount of income generated by a bank’s operations. The profitability position is a method of measuring a bank’s performance. Banks are designed to maintain a sufficient profit margin when their earnings are large.
3. RELATIONSHIP BETWEEN CUSTOMERS AND BANKS:
Near is made up of two words: customer and banks. A customer to a bank is a person or persons, society, form, or organisation who has made an offer to become a customer, which the bank has accepted.
A bank is defined as any person or business that is authorised to take deposits from individuals and is licenced by the federal government to serve as a financial institution to provide the following services.
– Acceptance of a deposit from a customer
– Making payments either locally or outside of Nigeria
– Providing loans and advances to customers
– Trading in financial instruments
– Clearing of cheques and other similar instruments for consumers.
However, the customer and bank relationship is one in which banks perform their basic obligations to customers, such as payment of deposits on demand, standing order activity, issuing of on his (customer’s) behaviour, and so on,
while the customer performs his own duties, such as securing the cheque book sufficient funds to the account for the purpose of standing other obligations, and so on.
Fraud is defined “in its lexical meaning, as an act or course of deception deliberately practised to again unlawful or unfair advantage, deception directed to the detriment of another” (F.I.T.C).
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