The Effect Of Bank Fraud  On Economic Growth And Development In Nigeria (A Case Study Of First Bank Nigeria P.L.C)

Project and Seminar Topics with material for Banking and Finance

Project and Seminar Topics with material for Banking and Finance


Fraud is an epidemic dimension that has eaten deep into the banking sector as well as the entire economy. Its devastating effect manifests itself in the deteriorating balance sheet of banks as well as in economic backwardness. As a result , measures to eradicate fraud in the banking sector becomes a central focus on the government and the monetary authorities.

It was against this back drop that this study was aimed at providing empirical evidence on the effect of fraud on performance of banks. Data for the analysis were obtained from primary data through questionnaires and secondary data from Nigeria Deposit insurance corporation (NDIC) Annual report.

These were tested with simple percentages and chi-square (x2) statistical technique on the basis of findings . it is recommended that government should make their impact felt in a combating fraud. Adequate internal control system should also be established to have check and balances among bank staff. It is envisaged that if all these are put in place, fraud will be reduced to its nearest minimum thereby restoring confidence to bank customers.

Table Of Contents

Preliminary Page(s)

  • Title page
  • Approval page
  • Dedication
  • Acknowledgement
  • Table of content

Chapter One

1.0 Introduction

  • 1.1 Background of the study
  • 1.2 Statement of problem
  • 1.3 Objective of the study
  • 1.4 Research questions
  • 1.5 Significance of the study
  • 1.6 Scope of the study
  • 1.7 Limitation of the study

Chapter Two

2.0 Literature Review

  • 2.1 Introduction
  • 2.2 Various definition of fraud
  • 2.3 Forms of fraud in banking industry
  • 2.4 Causes of fraud in Nigeria banking Industry
  • 2.5 Effect of fraud in Nigeria banking industry
  • 2.6 Laws relating to legal process of presenting fraud in banks.
  • 2.7 Ways of preventing and detecting bank fraud in Nigeria plc infirst bank
  • 2.8 The legal frame work and fraudulent practices approaches to the minimization or suggestion for the prevention of fraud.

Chapter Three

3.0 Research Design and Methodology

  • 3.1 Introduction
  • 3.2 Research design
  • 3.3 Sources / methods of data collection
  • 3.4 Population and sample size
  • 3.5 Sample technique
  • 3.6 Validity and reliability of measuring instruments.
  • 3.7 Method of data analysis

Chapter Four

4.0 Presentation and Analysis of Data

  • 4.1 Introduction
  • 4.2 Presentation of data
  • 4.3 Analysis of data
  • 4.4 Analysis of research question
  • 4.5 Interpretation of result

Chapter Five

5.0 Summary, Conclusion and Recommendation

  • 5.1 introduction
  • 5.2 summary of findings
  • 5.3 conclusion
  • 5.4 recommendation
  • references
  • appendix

Chapter One

1.0 Introduction

It will not be easy to say exact date fraud began in Nigeria banking industry. However, we are going to have a look at dates of the establishment of the first two indegnous banks in nigeira as this will help us to trace theorigin of some loopholes which living bring about fraudulent practices in nigeria banking system. The national bank of Nigeria was established in 1945 and the Africa continental bank in the year 1947.

1.1 Background Of The Study

Prior to 1952, there was no banking regulation to monitor the activities /operations of the commercial banks in the country as a result of this there was lapses in the banking system for instance, some banks got licence for operation but did not open one day for business some opened, collected money from their customers and vanished or wound up , due to these fraudulent acts. The first banking act was eracted to monitor the activities (operations of commercially banks in the country with the view to reducing banks fraud.

But it rather seemed to stimulate the occurrence of fraud in those banks because for the decade fraudulent practices have been on the increase and this call for a review or critical evaluation of some at the “Act” now we hear of cases of bank, been distressed , advance free fraud “419” and so many other fraudulent practices all in over banking industry.

1.2 Statement Of The Problem

Fraud is now a household work in Nigeria, because hardly can a day pass by in Nigeria without a reported case of fraud in our industries, especially the banking sector. This has brought a lot of worries to investors the government and other interest parties we now live in area of distrust among bank and their customers. The business times on January 8 1995 had it that “the rising incidence of the bank fraud has created a lot of distrust between bank and their customer”. More also there was a report in daily champion of January 9 1995, that a bid to defraud a bank f N1,000,000 failed, we also hared what happened In orient bank plc. Enugu cate 1999- infact the report seem endless and we cannot maintain all.

As a result of this issue of fraud day in and day out, the management of various banks are trying everyday to vise means of putting an end to bank fraud, while also some fraudulent staff and reinforcing themselves in the near future, it will have adverse effect on the general economy since most business cannot be effected without the bank acting as a mediator.

1.3 Objectives Of The Study

The purpose of this research is among other things.

  1. The determine if there are fraud in Nigeria Industry.
  2. To find out the causes of fraud in Nigeria banking industry
  3. To find out and discuss forms of fraud in Nigeria banking
  4. To have a work at the affects of fraud on the Nigeria banking industry in particular and the general public at large.
  5. To determine if there are legal loopholes in the Nigeria system that facilitates fraud.
  6. To suggest means of eliminating fraud in the banking industry in Nigeria.
  7. To determine staff involvement in Fraud in the Nigeria Industry.

1.4 Research Question

  1. Does fraud exit in the Nigeria Banking system?
  2. What measures has been applied to control or reduce the existence of fraud in Nigeria?
  3. What are the causes of fraud in Nigeria bank?
  4. What are effect of fraud in Nigeria banking system?

1.5 Significance Of The Study

This research work is significant with the following ways

  1. This work serve as oasis for further researcher in this case of study .
  2. It is on contribution to knowledge in this area of fraud in Nigeria banking is on banking performance and development generally to improve through surveying.
  3. The qualification necessary to improve performance through surveying.
  4. The work will throw height or how to plan strategically in other to improve banking performance for easy actualization of banks objectives at the end.

1.6 Scope Of The Study

The Scope of the study is on the input of bank fraud on banking economic growth and development in Nigeria with a reference point on first bank only.

1.7 Limitation Of The Study

It would have been best to make this investment in all the banks and other banks financial institution in the country in pursuit of excellent and the achievement of the best possible result. But it is difficult to reach such large population.

In view of this , such as finance, time constrainer it has been limited to a particular firm in the banking industry i.e orint Bank Enugu. Although most Analysis carried out many incorporate other banks and financial institution as the case may be.

1.8 Definition Of Terms

1. Banker:

A banker may be defined as a place where money and other valuable securities like gold, deeds, will etc are kept for safe custody.

2. Fraud:

It is a conscious premeditated act of a person or group of person with the intention of altering the fact for selfish or personal monetary gain.

3. Scope:

It is a range of action or observation.

4. Liquidation:

This is the selling of the asset of a business as part of the process of dissolving the busines.

5. Forgery:

This is the act of making or altering a writing or signature purporiting to be made by another, the false making ormaterial alteration of or addition to a written instrument for the purpose of deceit and fraud.

6. NDIC:

This is an acronym for Nigeria deposit insurance corporation. It is specially charged with the responsibility of protecting depositors by insuring customers deposits of the tune of N200,000.

7. Population:

A count of the number of resident within a political or geographical boundary.

8. Management:

The executives of an organisation especially senior executives.

9. Segregation:

The setting apart or separation of things or people ,as a natural process, maner of organizing people , it may be voluntary or enforced by law.

10. Duty:

A period of time spent at work or doing a particular task. It is also that which is morally or legally obligated to do

Chapter Five

5.0 Summary, Conclusion And Recommendation

5.1 Introduction

Banks generally have been experiencing fraud since its existence and evolution . this affects the performance and the profitabilyt of banks and will possibly lead to distress. Fraud is a major challenge the entire banking industry, no bank is immune to it and in all facts of life. The banking public experts accountability , fairness and transparency in their day operation for effective intermediation.

Though there were known cases of fraud in the sector, one major question still remains unanswered which is “What is the nature and different ways through which fraud can be perpetuated in banks” it is asserted that fraud in the bank is possible with corroboration of an insier.

5.2 Summary Of Findings

From the researcher, on empirical survey on fraud in the nigeria banking industry, the researcher was able to make the following findings:

  1. That fraud really exists in the Nigeria banking industry.
  2. That many factors have contributed to the causes of fraud in the Nigeria banking industry.
  3. That fraud has adverse effect on Nigeria banking industry and the prominent among such effect is the loss of fund by the banks.
  4. That there are legal loopholes in the Nigeria legal system that facilitates fraud.
  5. The large scale of the fraud cannot be committed without the aid of top management officers and as it was discovered that they are mostly involved in banks fraud.
  6. That there are lapses in the management control system of corporate customers.
  7. That recruitment exercise are poorly conducted that is , sacrificing cognate experience and other relevant technical knowledge for favoritism.
  8. That the management executive at most banks especially the state region owned, banks live subjected to undue influence and as such are not independent at the owners.
  9. Finally, according to the responses received fraud can minimize if not totally eliminated in the Nigeria banking industry.

5.3 Conclusion

It should be noted that a bank no matter how big or small it is from immune fraudulent practices and tendencies. This is irrespective of how complaint the management and staff of such banks are to the professional ethics and regulations.

It is on that record that one of the most sophisticated apex banks in Europe fell victim of fraudsters in the past. There is the need of total alertness from all concerned in the banking industry irrespective of the sophisticated security equipment / devices professional must be minimized.

However, it is the duty of the bank to employ all reasonable and practical measure towards the depositors to shareholders funds otherwise fraudulent practices could discourage banking habit as a result of loss of confidence in the banking system. Again, since the fraudsters are not spiritual beings but human beings, the customers and the entire public should be ever ready to work together in order to fight against frauds, irregularities and malpractices because the perpetration evil acts like amongst us.

5.5 Recommendation

The consequences of fraud in banks are very grave to counter this malady. The researcher is making the following recommendations with the hope that it will help to reduce fraud and totally eliminate it.

  1. Internally check such as operational control should be fit into the banking system to simplify the processing of entries in order to secure prompt services, to help in minimizing errors and to act as insurance against possible collection.
  2. Bankers being employed should be screened properly and satisfactory reference obtained.
  3. Bank staff should be rotated periodically and should not be left at one seat for too long.
  4. The board members of all banks should not be a idioated and suggest that they should unduely interface with the day to day operations of management as mostly found in some state owned banks.
  5. A good salary structure and other condition of service should be established to reduce the temptation to defraud the banks
  6. There should be proper training of bank staff to top and broaden their banking knowledge, inexperienced staff. Must not be expected to work in a sensitive area.

The Effect Of Bank Fraud  On Economic Growth And Development In Nigeria (A Case Study Of First Bank Nigeria P.L.C)

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