1.0 Introduction
1.1 General Overview of the Study
The Nigerian banking Industry is fraught with fraudulent practices. Almost every bank has experienced one form of fraud or the other.
According to Onuigbo (1986:53) for any bank to succeed in Nigeria, It must first of all devise a means of forestalling frauds both within and outside the bank.
Those frauds take different forms. They may be misappropriation or outright stealing of the banks frauds or other assets. But our concern is on the causes of these frauds. The researcher intends to determine what is responsible for this wide-spread fraud in the bank.
This research project therefore focuses on the cause of frauds. Why many frauds are committed without being defected and prevented at the early stage and to find out those responsible for perpetrating them.
This research project is necessary especially now that the Federal Government has come out to apprehend the fraudsters in the banking Industry and prosecuting most of them. It is therefore the position of this research to reveal the causes of these frauds so as to prevent future occurrence of such large-scale frauds in banks.
1.2 Statement of the Problems
The Nigerian banking industry has come a long way and has been flooded with so many banks at different times. With the exception of a negligible number of those banks, those banks, those banks have always disappeared no sooner than they are established. The result is that new banks have always cropped up in the banking industry. According to Uzomah (1987:18) Fraud and corruption are principally responsible for the high rate of banks death in the Nigerian banking industry”.
Having pinpointed fraud and corruption as the factors responsible for the failure of most banks in Nigeria, we are faced with the task of finding out what is, in turn responsible for the fraud in our banks.
1.3 Objectives of Study
The Nigerian economy was visible distressed by fraud. Frauds are among the known economic crimes now plaguing financial systems. However, the banking systems operations are mostly the conduct pipes through which the fund from the economy are transferred and or received through various fraudulent and forgery activities which according to CBN (2001) include;
Electronic frauds occur through manipulation, fraudulent encashment of negotiable instruments, and misapplication of lending proceeds and opening of letters of credit without proper documentation.
To determine the factors that fans the members of fraud in our financial system and the society at large is therefore the purpose or objective of this study including:
- To analyze the general direction in which fraud is changing within the period covered in this study.
- To analyze the empirical evidence of fraud with a view to investigate its influence on the Nigerian banking industry.
- To analyze the consequence of fraud in the bank.
- To analyze the impact of fraud on the bank overall economic growth.
1.4 Scope of the Study
The scope covered the areas that deal with the failed banks based on; fraudulent practices. Therefore, this study will be limited to some selected failed banks in Nigerian banking sector.
The selected failed banks are:
- Hallmark Bank Ltd.
- All States Trust Bank Ltd
1.5 Research Questions
- What are the causes of fraud in the banking Industry?
- What are the effects of frauds on the Banks?
- What are the consequences of fraud on banks?
- Does poor management cause of Fraud?
1.6 Significance of the Study
The importance of this research work which could benefit both an individual reader and an institution can not be over emphasized. The world is continuously changing, thus, a research work like this would expose the readers mind.
The research is significant because, it will serve as a reference source for subsequent researchers on the issue involved. This piece of work will benefit the entire country because when banks fail due to large frauds the employees will lose their job and the entire economy suffers. The study will add to the volume of academic researches in existence.
1.7 Limitation of Study
As a result of the present situation of things in Nigeria and also the cost of living prevalent in it, I was unable to carry out a comprehensive research. For this reason, some various areas of study could not be reached as the cost of transportation and other logistic-support could not be achieved and met.
Another problem I encountered was the unavailability of materials, as I had to travel to other parts of the state.
Another limitation I encountered, was time, time was another responsible key factor as I had to combine my studies as in taking lectures and going out for research work at the same time to enable me improve.
1.8 Definition of Terms
Bank:
This is describes as a place where the business of acceptance of deposits from customers are being done. The transfer of these deposit from one account to another or their withdrawal in the form of notes, coins and the lending of money by way of loan or overdraft to customers are carried out.
Collateral Security:
This is any property that is pledge as security for the repayment of loan.
Overdraft:
This is a term for the excess of bank account withdrawn by a current account customer of bank.
Defraud:
This means to acquire something by fraud. That is to trick somebody out of what is rightly his.
Negligence:
This term refers to lack of care and precaution in the performance of fiduciary duty.
Embezzlement:
This is the illegal taking of funds belonging to bank customers.
Defalcation:
This term is used for the misuse of funds belonging to stockholders such as interest, incomes, fees, and commissions or through the use of fundamental expense vouchers.
