EFFECTS OF BANK FRAUD ON NIGERIAN ECONOMY
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EFFECTS OF BANK FRAUD ON NIGERIAN ECONOMY
BANK FRAUD AND ITS EFFECTS ON THE NIGERIAN ECONOMY, CHAPTER ONE
In today’s Nigeria, the level of fraud has reached epidemic proportions. It has infiltrated every part of our lives to the point where a three-year-old child talks about 419, the moniker given to the recently found fee fraud that is stalking us as a nation.
The term “fraud” refers to “deceit or tricking deliberately practised in order to gain some advantages dishonestly.” To be considered fraud, an activity must have a dishonest aim and be intended to profit the perpetrator at the expense of another person.
According to this concept, fraud in the Nigerian economy is not limited to banks. Although frauds affect all sectors of the economy and the size of an enterprise usually determines the volume of frauds committed, problems such as insufficient manpower, a poor internal control system, 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 sources of wealth all play a significant role in the perpetration of frauds. The fear now is the threats that this devilish and unscrupulous act will pose to the stability and survival of individual financial institutions,
as well as the performance of the industry as a whole, because frauds result in huge financial losses to financial institutions and their customers, depletion of shareholders’ frauds and capital base, and loss of trust in financial institutions.
Fraud and foreign exchange also have a negative impact on the banking business. Today, numerous banks are unable to endure the increasing pressure of competition among various banks as a result of the monster known as bank frauds.
Similarly, people’s trust in banks is rapidly decreasing because some individuals now choose to keep their money at home rather than in banks. The concern now is that if this act is not stopped, it will drain our resources because foreign investors will be hesitant to conduct business via our banks.
1.2 STATEMENT OF THE PROBLEM
The challenges of this research will focus around determining the ongoing cases of bank fraud in almost all banks and other financial institutions. Other issues include why banks have not been able to discover a solution to help reduce bank and financial institution fraud.
Furthermore, the research aims to determine the economic repercussions of frauds on the national economy as a whole, as well as the ramifications of these frauds on our international relationships in the global market economy.
1.3 OBJECTIVE OF THE STUDY
The goal of this research is to identify the efforts made by the government and its agencies to prevent and regulate fraud. By doing so, one would have highlighted the three segments involved in combating economic crime, which threatens the basic foundation of the financial system. To accomplish this, this study seeks to identify the following:
a. The factors that contribute to bank fraud in Nigeria.
a. The characteristics of bank fraud.
c. The scope of Nigerian bank fraud and
d. Methods for reducing or eliminating bank fraud in Nigeria.
1.4 RESEARCH QUESTIONS
This study was guided by the following research questions:
1. Is banking fraud caused by a lack of effective internal controls?
2. Is financial fraud caused by a lack of drive or incentive?
3. Is bank fraud widespread in all banks?
4. Do societal values influence bank fraud?
5. Do bank frauds contribute to our country’s decreasing economic fortunes?
1.5 SIGNIFICANCE OF THE STUDY
The research will be useful to banks and financial institutions that are immediately facing bankruptcy as a result of financial losses caused by fraud. It will also benefit the government and other public factors who are increasingly losing trust in banks, as well as the customers’ bank relationships, which have been severely affected as a result of frauds.
This project will also benefit the general people, who are losing large quantities of money to bankruptcies without sufficient recompense. It will teach students about the numerous methods used to commit fraud.
This can help them spot fraud more readily. The general people will gain as well, because they will understand the role of organisations or management in detecting fraud.
1.6 APPLICATION AND LIMITATIONS
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 elements of banking activity, but due to time and financial constraints, he focuses his work to frauds in commercial banks, particularly Afribank Nigeria PLC Enugu.
Most notably, records and publications were easier to obtain and frauds were easier to trace in commercial banks than in other banks. Though the author touched on fraud in merchant banks, the emphasis is on commercial banks.
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