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An Appraisal Of The Effects Of Fraud On Bank’s Profitability

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Download the complete materials on An Appraisal Of The Effects Of Fraud On Bank’s Profitability from chapter one to five with references


This research work is focused on the effects of frauds on bank’s profitability in Nigerian banking industry, a case study of Guaranty Trust Bank Ilorin. The study examines the effects of frauds on bank’s profitability and also to examine the causes and level of control of fraud prevention among banks in Nigeria.

In the course of conducting this research, some information were obtained through annual reports of Guaranty Trust Bank, NDIC/FITC reports of fraud cases, journals and past related books on fraud in banks. Three research hypotheses were proposed for the study while multiple regression analysis was adopted to analyse the data obtained.

Findings shows that fraud has significant effect on bank’s profitability and insiders and outsiders involvement affect bank’s performance. Contingent on the above, recommendations, centred mainly on the case study were made as follows:-

Authorisation in bank operation should be decentralized so that effort of fraudsters will be frustrated when they plan to defraud the ban

It is recommended that there should be installation of close circuit television (surveillance camera) to monitor areas of cash and cheque is been handled.

Among the Nigerian industrial sectors today, one can say that the banking industry is the most visible and arouses the most public interest. The importance of banking sector in any economy stems from its role of financial intermediation, provision of an efficient payment system and facilitation of the implementation of monetary policies.

Today, the very integrity and survivability of these laudable functions of Nigerian banks have been called into question in view of incessant frauds and accounting scandals. According to Oseni (2006), the incessant frauds in the banking industry are getting to a level at which many stakeholders in the industry are losing their trust and confidence in the industry.

It is a known fact that no area of banking system is immune to fraudsters, not even the security system designed to prevent it. Fraud is a global phenomenon; it is not unique to the banking industry or for that matter, peculiar to only Nigeria. With the crash of multi-national corporation like Enron in 2001(Bratton 2002); fraud in its effect reduces organizational assets and increase its liabilities with regards to banking industry. It may engender crises of confidence among the banking public, impede going concern status of the bank and ultimately lead to bank failure.

Several legislation were put in place to reduce, alleviate and if possible eliminate the occurrence and incidence of fraud in the industry.

  • Company and Allied Matters Act (CAMA 1990)
  • Banks Employee, etc (Declaration of asset)
  • National Drug and Law Enforcement Agency (NDLEA) Act 1990
  • Special Tribunal Act 1990
  • Central Bank of Nigeria (CBN) Decree No. 24 of 1995
  • Nigeria Deposit Insurance Corporation Decree 22 of 1998
  • Bank and Other Financial Institution Decree (BOFID) 1999
  • Economic and Financial Crime Commission Act 2004

The existence of fraud in our banks is not a new thing to the nation. It has been a rampant issue that needs to be tackled.


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