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BANKING FRAUD AND ITS EFFECTS ON NIGERIA ECONOMY

ABSTRACT

This study assessed the effect of bank fraud on Nigerian economy field survey research methods were employed in the study. Data were collected from the financial statements of the selected banks in Nigeria This study adopted both descriptive and inferential statistics to achieve the stated objective. The descriptive statistics used included measures of central tendency such as mean, maximum and minimum and measure of variability such as, variance and standard deviation. The inferential statistics adopted was OLS Model –Multiple Linear Regression Analysis.  Customers’ deposits and Bank distress were regressed on the various explanatory variables to determine the impact of banking fraud on the Nigerian economy. The study established that the relationships are significant and that the models can be used for meaningful analysis and decision making. Again it was ascertained that  there is a great level of interaction between bank fraud and economic development of Nigeria. This research work has attempted to highlight the incidence and magnitude of fraud and some of its negative impact on the Nigeria economy. Fraud inflicts severe financial difficulty on banks and their customers. The study recommended that banks need to strengthen their internal control systems to be able to detect and prevent fraud and fraudulent activities and to protect its assets. The regulatory and supervisory bodies of banks in Nigeria need to improve their supervision using all tools at their disposal to appropriately check and curtain the incidence of fraud and fraudulent practices in the banking industry in Nigeria.

CHAPTER ONE

INTRODUCTION

Background to the Study

The banking industry is one of the most important financial institutions in Nigeria, and a central nervous system to the economy with special emphasis on its roles and challenges Dennis, (2013). The Nigerian banking sub-sector is a mainstay of the nation’s economy as it is involved in the administration and marshaling of financial resources to various sector of the economy which allow the economy to grow and expand. The banking subsector, at times venture into project financing in the real sector of the Nigerian economy, this therefore, support the process of economic growth and development of nation CBN, (2009). Any tension therefore in this sub sector will cause serious distortion in the nation’s economy. 

This was experienced in the late 2007 till the end of year 2010 when the nation had a bitter experience of financial turmoil due to the financial recklessness of Banks’ top management CBN, (2010). Prior to this period of financial turmoil in the banking sub-sector in the country, Nigerian bank is notable among other things for high recruitment of labour force Okpara, (2009) and in a bid to ensure an efficient and effective performance, banks get the best hands to handle daily transactions and activities. Huge amount are expended to carry out their recruitment exercise, and most often this may be outsourced to other human resources consulting firms, also when the recruitment and selection exercise had been done, they also commit fortunes towards training and retraining of staff member all of which is to improve the technicality and

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