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This study investigates the impact of fraud and forgery on the Nigerian banking industry. One of the most important characteristics a bank must have is that its customers have unwavering and unquestioning confidence in the banking system. However, due to acts of fraud and forgery, this confidence has been reduced to the bare minimum.

This has a long-term impact on the economy because a good banking system helps to promote economic development. For this investigation, the primary source of data gathering was used. The sample size of the study was determined using simple random sampling, which was utilised to choose 50 firms.

To test the hypotheses, the chi-square statistical method was utilised. The findings demonstrated that bank fraud and forgery have a detrimental influence and implication on the banking system and other sectors of the economy that comprise the entire system.

It was also concluded that the banking industry’s total loan portfolio affects the industry’s deposit base because performing credit facilities have a positive impact on the deposit base because loan payments increase the deposit base and interest on such loans is realised immediately. It was also suggested that members of the public abandon the habit of fostering corrupt practises as a way of life.


1.1 Background Of The Study

Banks all over the world have contributed enormously to economic growth and development of nations due to their unique position in the economy; thus, the banking sector in any country plays a critical role in boosting the level of economic activity.

A bank is any person, partnership, or organisation that provides basic financial services that is licenced as a banking institution by the federal government.

Accepting deposits from the general public, providing payments to depositors on demands up to the amount of money available in their accounts, granting loans and advances to credit, participating in the clearing of cheques, and so on are examples of basic banking services.

For a long time, any problem that seems to impede their smooth functioning, such as fraudulent practises, has been treated seriously. The Nigerian financial system has suffered from fraudulent practises performed by banks as a corporate organisation.

In the same vein, Osamwonyi (1998) defined fraud as any activity or deception practised to cheat, deceive, or manipulate others.

As a result, the concept of fraud varies greatly in nature, but can be summarised as the misuse, falsification, and manipulation of facts and numbers by firms or individuals for personal advantage.

Any unfair conduct, whether against the bank by its clients, against the bank (including its executives), or against the bank by its officers, is considered fraud.

Fraud has a negative impact on the financial system since it causes money to be lost, which obviously diminishes the industry’s earning base. It also causes shareholders to lose faith in the banking sector because it may harm their dividend. Fraud is viewed as a system leakage.

Bank fraud affects bank employees through dismissals, firing, or suspension. As a result, fraud and fraudulent practises in any country’s banking business impede economic advancement. Governments, institutions, and numerous agencies have made efforts to limit the prevalence of these frauds.

For example, the Nigerian government promulgated and ordered in 1994. The failed bank tribunal will try frauds and bank officers involved in contributing to bankrupt banks. Institutions have also tightened loopholes and recommendations and applied tough measures such as internal controls system,

compliance with producer for the opening of new accounts and transfers, meticulous examination in hiring and recruiting personal of banks, proper inspection of books, and remunerating workers.

1.2 Statement of the Problem

The purpose of this research is to determine the impact of fraud on the Nigerian banking industry. Banks that are in financial distress Insiders have committed numerous frauds and abused credit facilities in Nigeria today.

Instead of decreasing, the scope of bank fraud has increased. Since the 1970s, banks have shown laudable expansion, but our financial system has been plagued by a slew of issues, one of which is the sector’s intractable fraud.

This investigation on fraud in Nigeria’s banking industry was prompted by the size of the problem and its impact on the banking industry.

Some of our banks’ non-profitability is due in part to numerous fraud incidences. The regulatory authorities, the Central Bank of Nigeria (CBN) and the Nigeria Deposit Insurance Corporation (NDIC),

liquidated 31 banks in May 2003, mostly due to fraud. As a result, the purpose of this research is to assess the impact of fraud on bank profitability and survival.

1.3 Research Questions

The following questions will guide behaviour:

1. To what extent does bank fraud impair the performance of Nigeria’s banking industry?

2. How much does lax internal control contribute to bank fraud?

3. How much influence do forgeries have on shareholder decisions in the Nigerian banking sector?

1.4 Objectives of The Study

The study’s key goals are as follows:

1. To investigate how bank fraud affects the performance of Nigeria’s banking industry.

2. Determine the extent to which lax internal controls contribute to bank fraud.

3. Determine the impact of forgeries on shareholder decisions in the Nigerian banking sector.

1.5 Research Theories

The First Hypothesis

Bank fraud has little impact on the performance of Nigeria’s banking industry.

Hypothesis No. 2

Weak internal control has no substantial impact on bank fraud.

Three Hypothesis

In the Nigerian banking sector, forgeries have no meaningful impact on shareholder decisions.

1.6 Importance of the Research

The nature of this investigation necessitates the use of secondary data. Furthermore, an econometric model will be specified to investigate the impact of fraud on the Nigerian banking system between 2010 and 2015.

The scholarly study on frauds in Nigeria’s banking business will be valuable to a variety of organisations, including scholars, students, the government, and the general public.

Students of banking and finance, economics, accounting, and management, among other disciplines, should use this text as a valuable research tool. Second, it will help readers, financial institutions, non-bank financial institutions, financial analysts, and the government comprehend the causes of fraud and their impact on the Nigerian banking industry.

The research activity is thus intended to help the general public become acquainted with various frauds and their methods of execution in order to gather sufficient knowledge to enrich individuals’ and collective experience in fraud management and prevention.

1.7 Scope of The Study

This study investigates the impact of fraud and forgery on the Nigerian banking industry. It was conducted over a five-year period (2010-2015). For this study, the researcher employed a sample of 50 people to conduct an effective survey in Benin Metropolis.

1.8 Limitations of The Study

Given these constraints, challenges are unavoidable while conducting this type of research.

More troubling was the un-corporate attitude of bankers who were not always eager to provide data on fraud as it harmed their irrespective banks: this is because public view of the bank’s corporate image will be negatively affected, therefore the necessity to withhold information on frauds.

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