OVERVIEW AND IMPACT OF FRAUDS IN THE BANKING INDUSTRY IN NIGERIA
ABSTRACT
Fraud is an awful phenomenon, which like a vein has invaded Nigeria banking industries and the society in general, and puts any organization that it comes into in a distress point or in a state of liquidation.
This study highlights the nature and various types of fraud in banks, effects of ban fraud and control measures adopted by management to check fraud incidents.
Frauds in the banking system should as much as possible be minimized as it kills the bank and destroys the economy of a nation.
Finally, the research work adduced that continuous vigilance should be the watch work if fraudulent practices are to be reduced and possibly eliminated in banking industry.
TABLE OF CONTENT
CHAPTER ONE
Introduction 1
1.1 Background of the study 1
1.2 Statement of the problem 4
1.3 Purpose/objective of the Study 7
1.4 Significance of the study 8
1.5 Limitations of the study 9
CHAPTER TWO
2.1 Review of related literature 11
2.2 Concept of Fraud 13
2.3 Types of Fraud 15
2.4 Impacts of frauds in the Nigeria banking industry. 23
2.5 Extent of Bank Frauds 28
Reference 30
CHAPTER THREE
Research design and methodology 31
CHAPTER FOUR
Findings 33
CHAPTER FIVE
Recommendation and Conclusion. 35
5.1 Recommendation 35
5.2 Conclusion 36
Bibliography 38
PROPOSAL
IMPACT OF FRAUDS IN THE BANKING INDUSTRY IN NIGERIA
Frauds in the “banking” industry in Nigeria and in society in general, this study is going to highlights the nature and various types of fraud, causes of bank fraud, extent of fraud in banks, effects of bank fraud, detection, presentation and control measures to be adopt by management to check fraud incidents.
The purpose of this research work is to find out whether there is significance level of fraud in Nigerian banks, to know whether Nigerians practice aid or abate fraud and to consider the adequacy of the internal control system in detecting and preventing fraud in the bank.
Hypothesis will be formulated and tested with chi-square and inference drawn thereform. The method to be used in collecting of data will includes a well-structured and easy to follow questionnaire. The collection of primary data will be through the medium of respondents. The findings will reveal the compensation of banking services and the maintenance of effective internal control mechanism and it will help to reduce the incidence of fraudulent activities in the bank. In the same vein, the recommendation of adequate internal control system should be maintained, effective fraud management, strict adherence of administrative management policies should be ensured to check and possibly fraud incidence in the bank.
The detection and prevention of frauds should be elaborative effect between banks, their customers, the public, and the government. Frauds in the banking system should as much as possible, be minimized as it kills the bank and destroys the economy of a nation.
CHAPTER ONE
INTRODUCTION
With an award match to becoming an industrialized nation, Nigeria is witnessing true emergence of human resources as professional, which made possible the establishment of service industries and other business organizations. This belief was rather so strong that the urge to provide financial services can no longer be overlooked. to accelerate economic growth and economic development both government and some organized private groups were issued licenses to operate banks, in addition to a few banks that were already into business to operate systematic financial services.
these banks employed young men and women, but like every aspect of human endeavour have their challenges facing the banking industry and indeed all industries is the incidence of fraud. Bakere (2002.1) observed that the incidence of frauds in the Banking Industry has in the recent. Past posed a very serious threat to the very existence of financial institutions and is a matter of serious concern to the regulatory authorities and the Banking public.
Despite the stringent measures put in place by monetary authorities and internal control measures to check the activies of fraudsters, frauds in the banks to be on the increase. Edozie as observed by Adebayo (2001:5) stated that available statistics reveal that thirdly-one banks reported that they experienced frauds and forgery cases for the period (January –March 2002).
Banks are institutions known to operate on the centre –pin of public confidence. today that concept no longer holds as bankers themselves either initiate frauds or partakes deeply in fraudulent activities against their banks (employers).
According to Nigerian Dposit Insurance /corporation (NDIC) Annual Reports (1999:9), most of those banks were run around by a few greedy directors and officials who perpetrated frauds and all kinds of unethical practices against their institutions. This is an aberration that continues to erode public confidence in banks.
this scenario has singularly contributed to the liquidation of many banks. Agbata (1998:13) observed that one cannot avoid considering the fact that the distress in the banking industry was occasioned by fraud.
Now that cases of fraud have been established in the banks, the need therefore arise to find out problems associated with fraud, It’s impact on the macro-economy and how these problems are being tackled, hence the need for this study.
Generally speaking, movements in the economy of any nation result from the inter-play of money and other economic variables. In Nigeria, the impacts of money and other banking have been the dominant factors determining macro-economic performance. Despite this unique position of banks between other sectors of the economy, banks (especially commercial banks) are faced with a good number of economic crises. Notably among the cases is fraud.
As a result there has been a lot of criticisms from the investing public about the non-commitment and dedication to duty by Nigerian bankers. This stems from the fact that distress in the banking industry originated fraud, which was occasioned by bankers.
Directors and management of banks are also criticized of their inability to direct and control men and materials effectively. Poor accounting or reconciliation procedures may give an employee the opportunity to spot a weakness and devise a plan to take advantage of it. This is due to the weakness of internal controls in a bank. Understanding what motivates these individuals and how they are able to rationalize their behaviour is key to preventing it. Furthermore, they are criticized for using their positions and authorities to defraud their institutions. Repeated appeals and warning from well-meaning individuals and government for a change of these negative tendencies to the positive have yielded little or no dividend.
Criticisms have not been directed to bankers, Board of Directors
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