project examines fraud management and performance of financial institutions in Nigeria.
The study’s main objective is to know the magnitude of frauds in Nigeria banks
and to know why and how banks personnel commit fraud. The primary source of
data collection was used in gathering data from respondents. An empirical force affects the Nigerian
banking sector, using the ordinary least square estimation (OLS) techniques
called the exact AR Newton Raphson method. Data collected were presented
in tables and percentages for easy understanding. It was discovered that within
the period of review (2008 – 2013), an aggregate of five fraud cases were
reported from the institution. It was also found out that the highest of the
cases was foreign exchange transfer closely followed with that of interest
computation and application of saving ledger account. It was concluded that
adequate and close managerial supervision and control, regular accounts
balancing were ranked as highly and most effective measures against fraud. It
was recommended amongst others that there is need not to impose confidence to
the extreme on employees, since human beings cannot be easily predicted.
of Contents vi
Background to the Study 1
Statement of Problems 3
Research Questions 3
Objectives of the Study 4
Statement of Hypothesis 4
Significance of the Study 5
Scope of the Study 6
Limitation of the Study 7
Definition of Terms 8
Two: Review of Related Literature
Types of Fraud and Ways of Defrauding
Causes of Bank Fraud 15
Effects of Fraud in Banks 18
Measures for Controlling Fraud in Banks 20
Brief History of Union
Three: Research Method and Design
Research Design 28
Description of Population of the Study 28
Sample Size 29
Sampling Techniques 29
Sources of Data Collection 29
Method of Data Presentation 30
Method of Data Analysis 31
Four: Data Presentation, Analysis and Interpretation
4.1 Introduction 33
4.2 Data Presentation 33
4.3 Data Analysis 34
Five: Summary of Findings, Conclusion and
5.2 Summary of Findings 40
Background to the Study
As in many other
industries in the Nigerian economy, most banks are faced with problem of fraud.
It might be a gross-over statement to call the Nigerian banking system citadels
of frauds. Whilst, very truly, fraudulent practices are rampart in Nigeria the
level (amount and number) of fraud is not unexpected of a developing and in
experiencing banking system such as ours, it is so far to the credit of the
Nigeria monetary authorities, the public at-large and perhaps any other
concerned Nigeria that no bank has actually failed in Nigeria as a result of
fraud. However, one should be disturbed by the regularity of fraud perpetration
in our banks and effort should be made by all and sundry to make this bank to
quite a reasonable extent of not totality.
The effect of fraud on
our banks are far reacting a high height and they include; huge financial
losses of the banks and their customer the depletion of shareholder’s fund and
the banks capital base. Others are band management embarrassment and loss of
confidence by the customers on our banks. The time, energy and money that would
have been used in other development purposes expansion, customers, services and
perhaps too, other social responsibilities, to the society-are diverted towards
setting up fraud control and prevention system. These automatically increase
running cost and most painfully, a major set back at the promotion of banking
habit among out people.
Although, the monetary
authority and all other concerned have been credited for the simple fact that
no bank failed in this country as a result of fraud, it is worth nothing that
record has it all, fraud had led to the closure of some banks in other parts of
the world and this may take a position of the current trend is not solid. The
job matter bank of affairs in great Britain and also the collapse of some banks
in Kenya are very good examples, since the rate of occurrence has reached an
alarming height and thereby causing a strong and urgent concern there is the
need to put a final stop.
Statement of Problem
Considering the effects
of fraud and fraudulent acts as pointed out in the introduction, the purpose of
this study is to effectively comb and curb the incidence of frauds in our banks
using selected banks in Edo State. Among such banks include; Zenith Bank
Nigeria Plc, Auchi and GT Bank Plc.
To achieve the objective
of this research, the some problems need to be addressed, this include, why
bank personnel commit fraud, how effective are fraud control measures in the
banking system and the possibilities of setting sufficient information to
predict fraud occurrence in banks.
1.3 Research Questions
The following research questions are relevant for understanding
of the study.
What is the magnitude of frauds in Nigeria
Why and how do banks personnel commit
How effective are fraud control measures
in our banks?
What is the possibility of setting
efficient information to predict fraud occurrence in banks.
1.4 Objective of the Study
main objectives of the study are:
To ascertain the magnitude of frauds in Nigeria
To know why and how bank personnel
To ascertain how effective are fraud
control measures in our banking system.
To ascertain the possibility of setting
efficient information to predict fraud occurrence in banks.
1.5 Research Hypotheses
HO: Efficient information increases the chance of
eradicating bank fraud in Nigeria
HI: Efficient information
does not increase the chance of eradicating bank fraud in Nigeria banks.
HO: Bank fraud control is
not effective in controlling bank fraud in Nigeria.
HI: Bank fraud control is
very effective in controlling bank fraud in Nigeria.
Significance of the Study
Fraud is a hydra like
virus which permeates all areas of banking operation and causing lots of losses
to the institution. One can not imagine an organization establishment to
contribute in its little or large from to societal development, provide
adequate returns to the investors.
From all experience,
frauds are unique in terms of the system of planning and execution. Knowledge
of the various ways which these frauds have been perpetrated in the past and a
foresight or an anticipation of the possible system in the future, considering
the past, can be efficient and effective in guiding management prevention and
re-occurrence of frauds, for instance, a customer’s cheque paid out previously
by a cashier to the bearer, debited to the customer’s account and filed out may
be taken and made to pass through the system again i.e. paying a single cheque
twice or more and at different days.
Secondly, a fraud
occasioned by forged mandate the very common one, where the fraudulent person
lay had in the cheque book or leave and draw it to any extent and perfectly
forged the customer’s signature such that no one can actually say it was not
signed or drawn by the legal owner. In either case the bank is to make good
such effected customer’s account. In from the above one seems to agree that
majority of the frauds are born by the bank and the banks should pursue
effective informal control measure to prevent and manage frauds.
This research work
therefore is designed to help managers in the financial institution to get
acquainted with the view of gaining sufficiently that would enhance their
individual and collective experience in management and prevention of frauds.
Scope of the Study
Many definitions of
fraud has come up but we shall for the purpose of this research re-state and
examine some. Fraud is defined as the act of depriving a person distantly, of
something to which he is or would or might but for the perpetration of fraud,
be entitled. This study critically examines the fraud management and
performance of financial institutions institution in Nigeria which examine the
theft and fraudulent of people’s finances into some back-pocket. The study is
examined in financial institutions all over the nation but more emphasis on
Zenith Bank Plc in Auchi and a time frame of 5 (2008 – 2013)years was used the
recent correlation of data using a sample size of 20 was used for effective
Limitations of the Study
As a matter of fact,
fraud in banks is a very sensitive one. It is sensitive because it occurs in
banks and other bankers hardly agreed on the incidence of fraud in their bank.
This is due to the fact that it may scare their customers and competition could
capitalize on that. However, personal observation and experience as a long term
practice banker has also been put to play in the research work especially that
these observation and experience were not originally documented. Other
limitations include traveling time and cost associated with traveling. As
student, finance is so limited to enable one do a job that demand consideration
coverage place especially where one has to travel over and over again for
sourcing data (financial institution through human errors and staffs).
Time would have very
well sufficient for this task but work is done along side with other equally
important job as progress test and examination, lecture period all which reduce
the time consideration. The most striking limitation is the non-availability of
necessary book on this problem in the school library.
Definition of Terms
an act or course of deception deliberately practiced to gain unlawful and
unfair advantage, such deception is directed to the detriment of another.
A person or people who plan and execute fraud. They could be trained or not.
Internal control system: Means 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 and efficient manner to ensure adherence to
management policies, safe guard the assets and source as far as possible, the
completeness and accuracy of the records, the individual components of an
internal control system are known as control or internal control.
That aspect of internal control which is concerned with the prevention and
early detection of fraud and this will involve the arrangement of book-keeping
ad other clerical duties in such a way as to ensure much as possible.
i. That not a single task is executed from
its beginning to its and by only one person i.e. the task should be divided
into segments and each segment handled by different person.
ii. That the work of each clerk engaged on a
task is subject to an independent check in the course of their duties.