MANAGEMENT OF FRAUDS IN NIGERIAN COMMERCIAL BANKS: AN INVESTIGATION OF THE ROLE OF CBN

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ABSTRACT

The research is on the management of fraud in Nigeria Commercial Banks. The main objective of the study is to identify the causes of fraud in commercial banks. The researcher analyzed the data collected based on the response from the questionnaires distributed

The major findings of the study are:

1.     The causes of frauds in commercial bank includes

       a.    Poor management and poor security arrangement

        b.    Inadequate staff training

2.     The various types of fraud in commercial banks include:

a.    Loan fraud

b.    Cheque fraud

 c. Advance fee fraud.  On the basis of the above findings, the study concludes that management of fraud in commercial banks is of the great importance and has a lot of benefit which includes given confidence to the bank customers that their money is safe, encouraging or attracting local or foreign investors. Based on the finding, it is recommended that:

  1. Government should establish more anti-fraud and anti- corruption agencies to assist in sanitizing the Nigerian banking system.  
  2. Bank’s management should employ strategies that will ensure early and prompt detection, prevention and control of fraud in commercial banks.

TABLE OF CONTENTS

Title Page………………………………………………………………..i

Approval page………………………………………………………….ii

Certification……………………………………………………………iii

Dedication………………………………………………………………iv

Acknowledgement……………………………………………………..v

Table of Content………………………………………………………vi

List of Tables………………………………………………………….vii

Abstract………………………………………………………………….v

Chapter One:

  1. Introduction…………………………………………………….1

1.1   Background of the Study…………………………………….1

1.2   Statement of the Problem……………………………………2

1.3   Objectives of Study……………………………………………3

1.4   Research Questions…………………………………………..4

1.5   Research Hypotheses…………………………………………4

1.6     Significance of the Study…………………………………..5

1.7   Scope of the Study…………………………………………….6

1.8   Limitations of the Study……………………………………..6

1.9   Definitions of Terms…………………………………………..7

1.10: Historical background of CBN and Commercial

Banks in Nigeria……………………………………………….9

References

CHAPTER TWO

  • Review of Related Literature……………………………….12

2.1   Origin of Fraud………………………………………………..12

2.2   What is Fraud?……………………………………………………12

2.3   What is Bank Fraud?……………………………………………15

2.4   Nature and Types of Bank Frauds………………………….16

2.5   major Causes of Fraud in the Commercial Banks………26

2.6   Implications of Fraud on the Bank and Entire

Economy of Nigeria ……………………………………………34

2.7   Punishment and Penalties to fraud Perpetrators………..37

2.8   Fraud Detection, Prevention and Control…………………40

2.9   CBN Effort to Fraud Control………………………………….9

2.10 Extent of Fraud of Banks…………………………………….59

References

Chapter Three

  • Research Methodology……………………………………….63

3.1   Area of the Study……………………………………………..63

3.2   Sources of Data……………………………………………….63

3.3   Population of Study………………………………………….64

3.4   Sample Size Determination………………………………..64

3.5   Instrument used for Data Collection ……………………67

3.6   method of Data Analysis……………………………………68

References

Chapter Four

4.0   Data Presentation Analysis and Interpretation………..70

4.1   Analysis of Questionnaires Distribute and returned….71

4.2   Section A: Demographic Data……………………………….71

4.3   Section B: ……………………………………………………….73

4.4   Hypotheses Testing……………………………………………84

Chapter Five

5.0   Summary of Finding, Conclusions & Recommendations.

5.1   Major Findings………………………………………………….95

5.2   Conclusion……………………………………………………….95

5.3   Recommendations……………………………………………..96

Bibliography

Appendix A

Questionnaire B

LIST OF TABLES

Table 4.1:  Age Distribution of Respondents………………………………71     

Table 4.2:    Data on the Sex Distribution of the Respondents………71

Table 4.3: Data on Education background ………………………………73

Table 4.4:    Data on the martial status of the respondents…………..74

Table 4.5: Data on Impact of fraud on bank performance……………..74

Table 4.6: Data on the relationship between volume of work &

fraudulent activity……………………………………………….75

Table 4.7: Data on the impact of poor management and poor security arrangement in commercial banks…………………………………..76

Table 4.8: Data on the causes of bank fraud………………………………77

Table 4.9: Data on the effectiveness of CBN……………………………….78

Table 4.10: Data on what constitutes the types of fraud……………….79

Table 4. 11: Data on the spate of fraud in commercial banks……………………………………………………………………….79

Table 4. 12: Data on the Control Fraud…………………………………….80

Table 4: 13: Data on what makes up personal control………………….81

Table 4:14: Data on the constitution of Accounting Control ….82

Table 4: 15: Data on Inventory Control…………………………………….83

Table 4: 16: Data on respondents response on how fraud can be

detected and control…………………………………………………….84

Table 4: 17: Respondents responses on whether poor management and poor security arrangement can cause fraud………………………87

Table 4.18: Respondents responses on the effectiveness of CBN……90

Table 4.19: respondent response on the spate of fraud in commercial banks………………………………………………………………………92

CHAPTER ONE

1.0   INTRODUCTION

1.1   BACKGROUND OF THE STUDY

        Over the years, irregularities have been the problems of commercial banks. The term irregularities are used to refer to intentional distortion of financial statement and misappropriation of assets for whatever purpose. Fraud is one type of irregularities. Fraud, in auditing guideline, is used to refer to irregularities involving the use of criminal deception to obtain unjust or illegal advantages.

        Fraud may entail that proper accounting records have not been properly maintained, it may also point out that some internal control system are not effective and could not form a reliable source of information for an auditor. Existence of fraud in a financial statement endangers it from showing a true and fair view and complying with the provision of the companies and Allied Matter Acts (CAMA) 1990.

        Therefore, fraud in banks must be looked at generally as “acts that involves the loss of assets by banks through dishonest and deceitful means. The fraudster intentionally but dishonestly benefit himself to the detriment of the bank, the bank staff, bank customers and any other member of the public via banking operations. Fraud can be committed by bank staff, bank customers or a third party that is non-customer (Eze, 2004).

  1. STATEMENT OF THE PROBLEM
MANAGEMENT OF FRAUDS IN NIGERIAN COMMERCIAL BANKS: AN INVESTIGATION OF THE ROLE OF CBN