The level of fraud in the present day Nigeria has been on the high
side. It has eaten into every aspect of our life and economy to the extent that
a three years old child talks about Advance Fee Fraud Scheme (419). The economy
has faced several challenges today as a result of the billions of naira that
have been lost due to the ugly Monster (fraud). The term “fraud” has been defined
in different ways by different authors.
For the purpose of this study, fraud can be viewed from the
following scholars and experts. The Oxford Advanced Learner’s Dictionary
defined fraud as criminal deception. Fagbemi (1986) defined it as the act
of depriving a person dishonestly of something which is his. In its
lexical meaning, fraud is an act or course of deception deliberately
practised to gain unlawful or unfair advantage ; deception directed to the
detriment of another. Financial Institution Training Centre (FITC). Helicon
(2000) also defines “fraud in law as an act of deception resulting in
injury to another,”. For an action to constitute frauds therefore,
there must be a dishonest intention and the action must be intended to benefit
the perpetrator to the detriment of another person.
Going by the definition,
fraud in the Nigerian economy cannot be
restricted to banks
alone. Although, fraud cuts across all sectors of the economy but the
size of an enterprises usually determines the volume of fraud perpetrated. The
problems such as; inadequate manpower, poor internal control system and
internal checks, inadequate incentives and unsuitable legal framework for
dealing with offenders, downturn in economy, recognition
being accorded the wealthy
people regardless of
their source of wealth play
a major role in the perpetration
of frauds. The fear
now is threat of
which the devilish and unscrupulous act will pose to the stability
and survival of individual banks, financial institution the performance of the
industry and economy as whole. Fraud results in huge financial losses to
financial institutions and their customers, depletion of shareholder funds and
capital base as well as loss of confidence in financial institutions.
1.2 STATEMENT OF PROBLEMS
The problems of this research work will revolve around finding out
the continuous causes of bank frauds in virtually all banks and other financial
institutions and its effect on the economy. In spite of the banking reforms and
corporate governance instituted by the Central Bank of Nigeria (CBN), fraud in
Nigerian banks has remained an unavoidable problem and has not only become
incessant but also has been on the increased in the recent pasts. This hydra
headed monster (fraud) has negatively affected the profitability position of
Nigerian banks and the general confidence repose in the banking industry has
Furthermore, the research is aimed at checking the economy
implication of these frauds to our international relationship on global market
1.3 OBJECTIVE OF THE
objective of the study is to highlight cause and various forms of bank frauds,
its effect and ways of preventing them. The specific objectives which this
study is designed to achieve include.
i.To identify the causes of fraud in banks
ii.To examine the various types of fraud
perpetrated in banking.
iii.To identify the various ways employed in
iv.To recommend measures aimed at preventing,
controlling and detecting the incidence of banks fraud.
1.4 RESEARCH QUESTIONS
The following research question guided this study:
1. In what ways does lack of
effective internal control system lead to banking fraud?
2.In what ways does lack of enough motivation or
incentive causes banking fraud?
3.In what ways do societal values contribute to
4.In what ways do bank frauds contribute to the
dwindling economy fortune of our country?
1.5 RESEARCH HYPOTHESES
purpose of this research work, the following assumptions are made;
is no relationship between effective internal control and bank fraud.
There is relationship between effective internal control and bank fraud.
There is no relationship between motivation or incentive and bank fraud.
is relationship between motivation or incentive and bank fraud.
Societal values do not of have any effect on bank fraud.
societal values do have effect on bank fraud
1.6 SCOPE OF THE RESEARCH
fraud and its effects on our economy, is an extensive topic that may involve
commercial banks and community banks. The researcher would like to touch
all aspects of banking activities, but for want of time and financial
constraints, this study focuses on the problem the researcher limits his work
to frauds in commercial banks especially Union Bank of Nigeria Plc Enugu.
importantly, records publications could be reached easily and frauds traced in
the commercial banks than other banks. Though the writer dwelled a little into
fraud in merchant banks emphasis is places more on commercial banks.
1.7 SIGNIFICANCES OF THE
Significance of this study can be seen from the key areas practical and
1.7.1 PRACTICAL SIGNIFICANCE
study will be significant to, and practically assist in boarding the
understanding of the following:
bank officials/management: it will enlighten then on key areas where attention
should be concentrated in order to minimize the perpetration of fraud.
customers¸ it will expose than to the knowledge of
dealing with their bank instruments such as cheques, deposit slips, ATM cards
etc in order to reduce the incidence of fraud in the banking industry.
addition, this research will aid in enacting laws that will not only be
effective but also revealing ways of curtailing the social vice
1.7.2 ACADEMIC SIGNIFICANCE
academic stand point, the study will be significant in the following ways.
will serve as a reference material for further studies by other researchers.
will contribute to the enrichment of existing literatures on the effects of
bank fraud in nig economic.
will proffer way (of interest to academics) based on empirical evidence on how
the cankerworm (fraud) can be minimized in the banking system.
and persons concerned to give out information needed for this
study will also pose some problem.
1.4 DEFINITION OF TERMS
FRAUD:- Frauds are acts of
dishonesty deceit falsifications and manipulations perpetrated to gain under
monetary and or non-monetary benefits.
INTERNAL CONTROL:- This
refers to the whole system of control, financial and otherwise, established by
the management in order to carry on the business of the enterprise in an
orderly manner, safeguard its asset and secure as far as possible the accuracy
and reliability of its records.
TERMS AND CONDITIONS APPLY
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