chapter One


Research background

The level of fraud in Nigeria today is high. It’s so ingrained in every aspect of our lives and economies that 3-year-olds are talking about advance payment fraud schemes (419). Today’s economy faces several challenges as billions of Naira have been lost to ugly monsters (scams). The term “fraud” is defined differently by different authors. For the purposes of this study, fraud can be viewed by the following scholars and experts. The Oxford Advanced Learner’s Dictionary defines fraud as criminal deception. Fagbemi (1986) defined it as the act of unjustly depriving someone of what belongs to them. In a lexical sense, fraud is an act or deception done intentionally to obtain an illegal or unfair advantage. Deception that harms others. Financial Institution Training Center (FITC). Helicon (2000) also defines “legal fraud as a deceptive act that harms another”. Therefore, for an act to constitute fraud, there must be bad faith intent and the act must be aimed at benefiting the perpetrator and harming others.

By definition, fraud in the Nigerian economy cannot be limited to banks alone. Fraud affects all sectors of the economy, but the size of a company usually determines the extent of fraud. Problems such as: Inadequate personnel, poor internal control systems and controls, insufficient incentives and inadequate legal frameworks to deal with violators, a weak economy, recognition given to the wealthy regardless of their source of wealth. all play an important role in committing fraud. Fear is now a threat, and satanic and unscrupulous behavior threatens the performance of individual banks, financial institutions, industries, and the stability and survival of the economy as a whole. Fraud causes huge financial losses to financial institutions and their customers, depletes shareholders’ funds and capital bases, and undermines confidence in financial institutions. In intermediation, banks mobilize savings from the economy’s surplus sectors and divert these funds to deficit sectors, especially private firms, to expand production capacity. However, fraud is defined by many scholars. Olufidipe (1994) defined a scheme deliberately carried out for profit (1991), and fraud is “a person or group of people with the intent to alter facts in order to gain illicit personal gain.” Intentional intent by ”. Another scholar Idowu (2 Camouflage, or the exclusion of truth for the purpose of dishonesty/disguise against the financial loss of an individual or organization. Fraud, as defined in the Chambers Universal Learners Dictionary Kirkpatrick (1985), means that he Not a scammer, a trap, a cheater, a trick, a cheater, a cheater. Having explained what fraud is, it is appropriate to define bank fraud, the subject of this study. However, bank fraud is the use of fraudulent means to obtain money, assets, or other property owned or held by a financial institution, or to obtain money from depositors.

According to the 2007 annual report and account statements of the Nigerian Deposit Insurance Corporation (NDIC), fraud and attempted counterfeiting incidents at insured banks in 2007 surpassed the 2006 record. For example, the 2007 NDIC report found a total of 1,553 reported cases of fraud and counterfeiting worth more than £10 billion, whereas in 2006 the perpetrators were transferred to another person’s sector. We reported 1,193 cases of fraud and counterfeiting worth £483.217 billion.

Today banks are unable to withstand the increasing competitive pressure between different banks due to a monstrosity called bank fraud. If this fraud is not stopped, it could wipe out our resources as foreign investors may decide it is unwise to do business through banks.


Evolving banks face fraud, which tends to affect bank performance and profitability and can potentially cause problems. The greater society expects more accountability, fairness, transparency and effective mediation from banks, ensuring that banks carry out their obligations with honesty and unquestionable integrity in their business. and ensure that it wins the trust and goodwill of the public. Banking has become more complex with advances in the field of information and communication technology (ICT), changing the nature of bank fraud and fraudulent activity. Barney (2008) observed that customers are relying heavily on the Internet for banking and the number of online transactions is increasing. Gates, Jacob, and Malphrus (2009) argue that the Internet offers fraudsters the opportunity to target and authenticate transactions with customers who are not physically present on the Internet. Concerns remain high in Nigeria despite bank regulation and bank investigations by the Central Bank of Nigeria (CBN), Nigeria Deposit Insurance Corporation (NDIC) and the Nigerian Bankers Association (CIBN) oversight functions. Fraud and other unethical practices in the banking industry. Therefore, this study examines the extent to which fraud and other unethical practices have affected the Nigerian banking industry in the past and present.

1.3 Purpose of the survey

The general purpose of this research is to identify the causes and different forms of bank fraud, their effects and ways to prevent them. The specific objectives to be achieved in this research are:

Me. Identifying causes of fraud in banks

ii. Investigating various types of bank fraud.

iii. identify various methods used in bank fraud;

IV. Recommended actions to prevent, control and detect bank fraud.

1.4 Research question

The following research questions guided this study.

1. How does the lack of an effective internal control system lead to bank fraud?

2. How does lack of motivation or incentive lead to bank fraud? 3. How do social values ​​contribute to bank fraud?

4. How does bank fraud contribute to the decline of our country’s economic wealth?

1.5 Research hypothesis

For the purposes of this study, the following assumptions are made.

There is no link between effective internal controls and bank fraud.

There is a link between effective internal controls and bank fraud.

There is no relationship between motives or incentives and bank fraud.

There is a link between motivations and incentives and bank fraud.

Social values ​​have nothing to do with bank fraud. Hi:
Social Values ​​Affect Bank Fraud

1.5 Importance of research

It is hoped that once the study is completed, the results will be very useful.

For banks and financial institutions, for authorities involved in banking, officers, employees, customers, and potential investors in the industry, to identify the various means involved in fraud (theft, embezzlement, counterfeiting, etc.) identifying the root causes of fraud in banks and banks in Nigeria, as is beneficial. This work will help the government to improve future policy and decision-making, especially performance in detecting fraud in banks in Nigeria. As the government thinks it is related to the restructuring of the institution. What makes this survey so useful to the general public is that the banking industry touches the lives of everyone involved in the economy. Banks around the world have made significant contributions to economic growth and national development. Issues such as fraud, which can hinder the smooth running of the banking sector, must therefore be seriously considered so as not to impede or disrupt the pace of development. Finally, it would also be beneficial for academia if those wishing to do further research in this area would find this research relevant to their work.

1.6 Research scope and limitations

The study focuses on fraud in the Nigerian banking industry, with strong interest in four insured banks. The four covered insured banks include United Bank for Africa Plc, Diamond Bank Plc, First Bank of Nigeria Plc and Zenith Bank Plc, all located in Nigeria. As a result of their research, researchers encounter several limitations that limit the scope of their research.

Employee reluctance:
In most cases, bank staff used in research are reluctant to provide information requested by researchers.

Researcher Commitment:
Researchers who were full-time students spent most of their time on other academic activities such as tests, classes, assignments, and exams, thus depriving the average focus of this study. Insufficient materials:
Another obstacle is the lack of materials. Researchers find it difficult to work long term with some of the necessary materials that could greatly contribute to the success of this research work.

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