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The goal of this research study is to analyse and determine the extent to which fraud and poor management contributed to bank failure through a detailed examination of the banking industry, with a focus on the currently troubled Savannah Bank of Nigeria Plc. whose operating licence was just revoked.

The first chapter investigated the historical history of banking in Nigeria, recognising the catalytic functions of banking in the economy, as well as other introductory studies on the amount of bank failure and fraud and their impact on the development of banking industry in Nigeria.

The second part provided an overview of bank failure in the Nigerian economy. The genesis, causes (fraud and poor management), and control difficulties involved in bank failure management were highlighted.

Particular emphasis was placed on the role of banking in the general development of people and the economy, as well as the consequences of its failure. The dispute surrounding Savannah Bank Plc’s cancellation of its operating licence, as well as the prospects of banking business, were also discussed.

In chapter three, the research described how the various data for this study were gathered and which information was employed to achieve the study’s objectives.

In chapter four, percentage tables were utilised to present and analyse the data acquired and which information was employed with a new to realise the study’s purpose.

In chapter four, percentage tables were used to present and analyse the data collected, while the chi-square method was utilised to test the hypothesis.

Finally, a critical review of the research study in chapter five demonstrated that bank failure in Nigeria is primarily due to fraud, a bad management team, and severe economic conditions, among other institutional and non-institutional causes.

However, it was suggested, among other things, that due to the unique and crucial location of the banking sectors, as well as the synergistic effects of change developing.

As a result, the government should constantly supervise the operations of bands through their agencies/regulatory authorities while without politicising their mandate. Banks should also tighten their internal control measures. Furthermore, if the regulatory authority charged with regulating the business keeps an eagle eye on the industry’s actions,

it will stem the flow of banks messing with the fortunes of depositors, stockholders, and other interested parties, to the overall good of the economy. This is because the banking industry plays a catalytic function in the economic confidence of the banking public.

The research also advised additional research on a very relevant related area of the subject topic. This is due to the topic of study’s dynamism and inexhaustibility.



The size, maturity, and safety of an economy’s banking industry is one of the indices used to assess its progress. This is due to the banking industry’s critical role in mobilising and using investible resources (financial) in the economy.

It serves as the country’s intermediary units through a process known as “financial intermediation.” The absence of a market for which can significantly impede economic activity growth; its commercial operations are economic development catalysts.

At the moment, the Nigerian banking industry appears to be on the point of collapse. The banking public appears to have lost faith in banking, and it is unlikely that this decline will be reversed unless regulatory agencies act. The Nigerian Central Bank (CBN) and the Nigerian Deposit Insurance Corporation (NDIC) rose to the occasion.

The government believed that the banking crisis of the 1990s was mostly caused by fraud, which led to the promulgation of the failed banks (Recovery of Debts) and financial malpractices in Banks Decree Number 18 of 1994 (failed banks Decree).

However, it is impossible to justify the failing bank Decree’s harsh tone and its implicit premise that fraud was a major cause of the banking crisis licences cancelled by the C.B.N ON account of sharp practises.

In other words, while the massive expansion in the number of registered banks may have exacerbated fraud, it is improbable that it was the main reason of later banking collapses. There is little doubt that fraud has exacerbated an already dire position in Nigeria’s banking system.

Fraud and embezzlement are uncommon. Both the government and the central bank are complicit in the deception and crisis fest. Furthermore, fraud may not be a sufficient cause of a banking crisis.

According to the study, severely poor management may not be fatal to a bank until terrible economic conditions result in unanticipated capital withdrawals or loan losses.

Even if every bankrupt bank is found to have suffered from mismanagement or fraud, or to have operated in an overcrowded banking market, it is possible that bad economic conditions will be the direct cause of many bank failures.

In a circular dealing with contemporary banking difficulties in Nigeria, the NDIC tacitly agrees with the aforementioned position. It concluded, “the revival of the banking system would necessitate strong political will, which should allow for the adoption of the appropriate failure resolution option, based on the regulators’ technical judgement.”

Finally, and most critically, a successful banking sector reorganisation would result in a stable macroeconomic environment with few relative pricing distortions, ensuring the economy’s long-term growth.” Instability in the global economy encourages fraud. If the future is regarded to be uncertain, for example, people are more inclined to get desperate and commit fraud.

It should also be mentioned that the financial industry is not the only one experiencing economic difficulties. Inconsistent government policies, excessive inflation, and a constantly sinking local currency have made planning unfeasible across most economic sectors, adding to the stress.

Government economic and social policies thus play a critical role in promoting a stable business environment across all economic sectors, including banking. Therefore, policy initiatives that can successfully address bank failure in Nigeria must reach outside the banks.

According to the study, the Nigeria Banking business, in addition to its conventional duty of financial intermediation, has a significant role to play in the development of the Nigerian economy. As a result, for the purposes of this study, the terms bank failure and bank distress are to be used interchangeably.


The number and frequency of crises in the Nigerian banking industry have increased in recent years. According to the NDIC, the volume of recorded fraud in Nigerian banks increased from N804m in 1990 to N3,199m in 1998, with N3,199m implicated in fraud increasing from 3% in 1990 to 22% in 1998.

The greatest fraud ever reported by a Nigerian bank in any given year occurred in 1998, when United Bank for African Plc wrote off N786m due to fraud. One can be tempted to regard the inquiring mind of the banking industry in Nigeria economic development/empowerment as a partner in progress. Could Nigeria not have survived without these banks, as she had done before their arrival?

Other issues/problems to be addressed in this study include:

a. Bank collapses that imitate economic growth are a sign of progress. The bank’s strategic stance has far-reaching consequences for depositors, workers, stockholders, and the entire community. As a result, the banking image is highly skewed, and little progress has been made in eliminating crises and restoring banking public confidence.

b. Based on the data available regarding big frauds committed in the past and their remarkable accomplishment. Due to the apparent thorough planning and the audacity with which they were carried out, one must not but recognise, albeit painfully,

that fraud is an emerging sector of the unseen yet strong (is it powerful?) industry known as crime. Investigations into their many manifestations are urgently required.

c. Aside from fraud, bad management and adverse economic conditions cause bank failure owing to unanticipated capital outflows or loan losses. As a result, it is possible that bad economic conditions will be the primary cause of numerous bank failures. This is evident in instances of political uncertainty and political tension spillover.

d. Regulatory agencies are unresponsive to the issues of enforcing fundamental standards linked to bank crises and fraud. This is possibly the most concerning. For example, an NDIC decree from 1998 requires insured banks to provide monthly reports of frauds, forgeries, or blatant theft, as well as a full summary of such events.

Unfortunately, most banks do not follow these basic rules. Of course, the questions are how many banks recognise the significance of these statutory requirements for themselves and the broader industry, and why are regulatory authorities not attentive to these challenges.

e. The failed bank edict was supposed to reflect an attempt by Nigeria’s military administration to prohibit parties from dodging justice by utilising legal intricacies, inefficiencies, and loopholes. The tribunal has sole jurisdiction over all ancillary proceedings,

including as remand, bail, and any other preliminary issues related to an off jurisdiction. With all of this power, the perpetrators of bank failure who have appeared before these tribunals have never served as deterrents to future perpetrators.

Regulatory bodies must do more than just cycling operating licensees and offering N50,000.00 to every depositor to encourage banking at all levels. Many depositors fear that the government has not done enough to protect their funds,

and many will scream foul if additional banks fail. The NDIC Act should be amended to provide for N100,000.00 as payout for insured deposits. These challenges and points of view are fundamental to this study, which is also addressed in the paper.


It is asserted that regulatory authorities have been unable to stop the main causes of bank failures around the world, regardless of the measures used. The rarity of frauds in our banking system has occasionally reached frightening proportions,

causing concern among our banks’ management. It might be argued that in Nigeria, they have contributed to the country’s existing structural and economic imbalances by ignoring the most important economic sector by the attention paid to it.

In light of the foregoing, the goal of this study is to examine the characteristics and complexities of bank failures, as well as the contributions of fraud, poor management, and other reasons, in order to propose viable methods to halt them. As a result, the purpose of this research is to:

a. Examine the functions of banks and their effects as catalysts for Nigeria’s economic development.

b. Determine the evolution, scope, and severity of bank failure in Nigeria.

c. Examine how much fraud, bad planning, or both have contributed to the occurrence of bank failure.

d. Identify further causes of bank failure:

e. Examine the methods and tactics by which regulatory bodies and banks have tamed this hideous beast.

f. Determine the issue impeding the successful implementation of such initiatives.

g. Investigate the principles of banking, the performance of banks thus far, and their future prospects; and

h. Highlighting a measure to reduce fraud and bank failures in Nigeria.

The author thinks that by the end of his investigation, these aims will have been met, notwithstanding significant reservations about banks’ ability to offer desirable rewards without jeopardising the institutions’ long-term viability.


The researcher chose the topic of study based on self-interest and the necessity to improve the state of the Nigerian economy in the aftermath of the dismal banking environment and recurrent bank collapse. The study will be of major importance for the following reasons: –

A. The banking industry will benefit from implementing the study’s findings and recommendations for reducing the incidence of bank collapse due to fraud or poor management.

B. The study’s findings will be used by economic policymakers to restore the banking system’s safety and soundness. The study could reduce the far-reaching negative impacts on national economic well-being caused by bank distress,

such as employment loss, strangling of sources of funding for government and citizens, loss of deposits, withdrawal of financial security / protection, and so on.

C. The regulatory authorities have worked hard to promote law reform ideas that will enable them to deal with distress situations in financial institutions more quickly and aggressively. This study will discuss the consequences, which are critical in contributing to promote the survival and stability of the banking sector.

D. Furthermore, computer fraud is critical, particularly in the Nigerian financial system, where little or no information regarding this electronic equipment was available until recently. This research aims to uncover strategies to mitigate the detrimental effects of this technology on bank internal control systems.

E. Finally, the general public will greatly profit from this research. It would aid in resolving their hunt for an economic breakthrough by putting in place a formidable system, which will ultimately lead to an improved standard of life and the restoration of Nigeria’s shattered image.


The following research question will be utilised in the context of this study:

a. What factors contribute to bank failure?

b. Do banks fail solely due to fraud?

c. Can poor management be blamed for bank crises?

d. What are the consequences of a bank failure?

e. Can bank fraud be attributed to a bank’s weak management structure?

f. What are the measures to reducing bank fraud?

g. What role do regulatory authorities have in halting or worsening Nigerian bank crises?

h. Do banks in Nigeria act as accelerators for economic growth and development?

i. How effective are law enforcement agencies in prosecuting financial crisis perpetrators?

j. Is the NDIC Act on insured deposits sufficient to compensate depositors in a bankrupt bank?

k. What elements work against the regulatory umpire’s ability to respond to their ever-increasing challenges?

l. What has been the banks’ performance thus far, and what are their future prospects?


In the next chapters, the following hypotheses would be stated and tested for validity based on the data obtained.

Ho1: Bank failure has nothing to do with fraud.

H02: Bank failure has nothing to do with a bad management team.

H03: Bank collapse is not caused by poor management.


This study work is a compilation of fraud and poor management as causes of bank failures throughout the world, with special reference to “Savannah Bank of Nigeria Plc,” and its impact on depositors, employees, shareholders,

the economy, and the national image abroad. The punishment meted out to fraud perpetrators to be sufficient to serve as a deterrence to others, the future prospects of banking business, and the current degree of public confidence in banking.

Conducting research is stressful and can be debilitating and troublesome at times. It entails a lot of travelling and diplomacy, and being a one-man show may result in some shortcomings, especially in a country as large as Nigeria.

The flaws in this instance are the uncooperative attitude of some responders in sensitive areas, as well as fraud and bank failure. Lack of secondary data due to banks’ refusal to pursue their pending fraud cases due to the cost and time necessary, as well as the malfunctioning of most Nigerian breweries.

Financial issues include transportation costs, the cost of photocopying relevant materials, time limits, departmental standards, and the general economic situation in terms of material costs and other accessory charges.

Another significant shortcoming worth noting is the judicial system’s failure to understand and punish offenders in accordance with the Act Decree that established them. This assumes that decisions are not carried out in practise to enable the author to form a conclusive view on the amount of compliance.


Bank: The definitions of the terms in the Oxford Advanced Learner’s Dictionary will be most appropriate for the purposes of this study. According to the dictionary, a bank is “an organisation or a place that provides a financial service in terms of deposit acceptance and payment on demand.” Banking is hence the business activity of banks.

Failure is described as “the state or instance of being inadequate or of not functioning as expected or required” by the same dictionary. Banking transactions as needed.

Catalyst: This might be defined as someone or something who aids or accelerates the process of transformation. It is a “doing” activity.

This is an adjective version of economic. Economy was described by Thompson’s Dictionary of Banking as “the administration of the concerns and resources of any community or establishment with a view to orderly conduct and productiveness.” It entails the administration’s art and science. Oxford Dictionary defines it as “the theoretical science dealing with the laws that regulate the production and distribution of wealth.”

According to the Oxford Advanced Learner’s Dictionary, a distress position foreshadows “a situation caused by a lack of money to meet an urgent need.” If a bank is unable to meet the CAMEL bank examination rating system, it is considered distressed.” This represents the pinnacle of chronic liquidity and insolvency.

Officer: According to the Oxford Advanced Learner’s Dictionary, an officer is “a person in a position of authority or trust.” According to this definition, a bank officer is a member of the bank’s personnel who has the authority to make commitments on the bank’s behalf.

Insolvency: According to the same Dictionary, insolvency is “a condition or situation in which one is unable to pay one’s debts.” Insolvency is declared when a bank is unable to redeem or make good on its debts (both short and long term).

NSE stands for Nigeria Stock Exchange.

Adetanye’s definition of fraud is more relevant for the purposes of this study. “Fraud is defined as a conscious, predetermined action of a person or group of people with the intention of attending the truth and / or fact for selfish personal monetary gain,” he says.

It frequently entails the use of deception and trickery. The action of forgery, fabrication of documents, unauthorised signings, and outright theft.”

Management/Poor Management: Management is described as “the people who control a business or similar organisation” by the Oxford Advanced Learner’s Dictionary. Extending further, poor management is defined as the control of a business by inexperienced and unskilled individuals.

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