ABSTRACT
Commercial Banks occupy an indispensable position in the Nigeria economy. They are the picot upon which other business firms and other activities revolve and “a conduit pipe through which all financial transactions pass”. However, literature in the field shows that fraud and other financial malpractice in the Nigeria Banking system nearly always lead to loss of monies that ordinarily belong to someone other than banks. In every bank cases where frauds with crippling frequency and in large sizes such banks may be forced to close down or outright distress as a result. When the commercial Banks lose money and it is wound up or distressed in turn the customers and the nation in general loses of money, which also affects the economy. These study, therefore investigate the various levels of fraud in our Nigerian banking system. To this end a hypothesis was tested and confirmed that fraud not only drain the economy, but also lead to a lost of confidence by foreign investors.
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Fraud however is defined as the intentional distortion of the financial statements to secure particular advantages such as the misappropriation of assets. The term fraud is used when it refers to irregularities involving the criminal deception to obtain an illegal or unjust advantage.
Fraud is defined in many perspectives, but basically it is the obtaining of material advantage by unfair or wrongful means, which involves moral obliquely. Banking fraud and other financial malpractices is a conscious or deliberate effort aimed at obtaining unlawful financial advantage to the detriment of another person who is the rightful owner of the fund.
The Nigerian financial system then was composed of the commercial Banks, Merchant Banks, Development Banks which comprises Nigerian Industrial Development Bank, Nigeria Bank for commerce and industry, Nigerian Agriculture and co-operative Bank, Federal Mortgage Bank of Nigeria, federal savings Banks, Agricultural credit Guarantee scheme etc, and the micro finance Banks. All these Banks helps in the development and growth of the Nigerian economy through specialization. Thesis where they provide funds for all the sectors of the economy through grants and loans for productions and other services.
Gap thesis where they bridge the financial needs of the economy and the fund supply through short and long term loans for indigenous projects and other investments.
Exigency thesis; where especially the Development Banks help to indigenize the economy through provision of fund to purchase foreign interest in the economy. Catalyst thesis; the economy is a predominantly mono-product which depends on oil for its foreign exchange earnings. It helps to speed up diversification in the economy.
It is good to emphasize and exercise the need of utmost good faith in the Nigerian Banking system. There must be understanding of what fraud is as against what it is not, fraud must be demystified unveiled and conquered. There must be understanding of the causes, negligence, lack of training, poor supervision etc. effects of fraud and other financial malpractices leading to loss of money and outright distress in Banking system which causes set back in the economy. It is also better to know how to prevent and detect fraud when it does happen, how to investigate and prosecute the offenders by applying suitable penal sanction to deter other potential fraudsters.
- STATEMENT OF THE PROBLEMS
The steady growth of financial obligations of the economy to its citizens, poses great challenges to the financial institutions to prove its reliability, accountability and transparency in its operations. These challenges are therefore, coursed by;
- Due to non transparency attitude of bank officials.
- Due to poor operations of banking facilities
- Non availability of corporate banking and ineffective reforms
- Non effective regulatory system guarding bank operations.
