ABSTRACT
This research work is aimed at evaluating the effectiveness and efficiency of fraud control techniques employed in Nigeria commercial banks. The compilation of this research work is structured into five chapters covering very relevant details relating the topics. The types, causes and effect of fraud on individual, banks and on Nigeria economy was discussed. Also various control techniques employed by Nigerian commercial banks in curtailing the incidence of bank frauds was enumerated and its effectiveness and efficiency taken into consideration. Analysis of findings, conclusions and recommendations were made and suggested for further research on the said topic was proffered.
LIST OF FIGURES
- Causes of fraud in banks
- Causes of fraud in banks
- Effects of fraud on banks
- Effects of fraud on banks
- Elimination of frauds in commercial banks
- Elimination of frauds in commercial banks
- Encounter of fraud in banks
- Encounter of fraud in banks
- Application of computer in controlling fraud
- Application of computer in controlling fraud
- Responsibility of management cadre in fraud commission.
TABLE OF CONTENTS
Title Page ii
Approval Page iii
Acknowledgement iv
Dedication v
Abstract vi
List of Tables vii
Table of Contents viii
CHAPTER ONE
1:0 INTRODUCTIONS 1
1:1 Background of the study 5
1:2 statement of the Problem 9
1:3 Objective of the Study 10
1:4 Research Questions 11
1:5 Scope of the study 12
1:6 significance of the study 13
1:7 Limitation of the study 14
1:8 Definitions of Terms 16
CHAPTER TWO
2:0 REVIEW OF RELATED LITERATURE 19
2:1 Concept of Fraud 23
2:2 Types of Fraud 25
2:3 Causes of Fraud 29
2.4 Effect of Fraud 35
2.5 Control of Fraud 36
CHAPTER THREE
3:0 RESEARCH DESIGN AND METHODS
3:1 Research Design 50
3:2 Area of study 50
3:3 Population of study 51
3.4 Sources of Fraud 51
3.5Sampling Sample and Techniques 52
3:6 Research Instrumentation 57
3:7 Validity and liability of research instrument 59
3.8 Method of Investigation 60
CHAPTER FOUR
4:0 Presentation and Analysis Of Data 61
4:1 Presentation and Analysis Results 68
CHAPTER FIVE
Summary of findings / Conclusion and recommendations.
5:1 Findings 97
5:2 Conclusions 99
5:3 Recommendations 101
Bibliography
Appendix
CHAPTER ONE
1:0 INTRODUCTIONS
Security is a fundamental and increasingly important issue in today’s banking industry (kamiainen, 2010). Over the last few years, the number of fraudulent transactions committed by third parties has risen tremendously (Banks, 2005) consequently; fraud prevention has become a central concern to banks customers, and public policy makers (Sullivan 2010). As banking fraud might ultimately affect customer relationship quality and customer loyalty, fraud prevention and its effective communication is an important topic for academic research.
Banking fraud hurts both banks and their customers, Banks incur substantial operating cost by refunding customers monetary losses (Gates and Jacobs 2009), while bank customers experience considerable time and emotional losses. They have to detect the fraudulent transaction, communicates them to their banks, initiate the blocking and re-issuance or re-opening of a card or account, and dispute the reimbursement of their monetary losses (Douglas, 2009; Malphrus 2009). Becoming a fraud victim may also impact customer perception of feeling secure and protected at their bank. Accordingly, fraud may damage the bank-customer relationship because of shattered trust and confidence (krunmeak 2000), as well as increased dissatisfaction because of a perceived service failure (Yarela -Neira et al, 2010). This, in turn may negatively affect customer loyalty and stimulate switching behavior (Rauyruen miller, 2007, ceruber 2011)
Fraud prevention may thus entail chances for banks to enhance their relationships with their customers. it gives banks the opportunity (re-)assure customer trust in their services (Avardian Analytics, 2011). Indeed, the associated feeling of security may be an effective means to retain an existing customer and attract new ones (Behram, 2005).however, in order to translate fraud prevention in to higher quality relationships, communication is key. Effective communication allows a bank to invoke a shared understanding of values between itself and its customers (Asip and Sargant, 2000). Banks should therefore demonstrate their knowledge and competence regarding fraud prevention by communicating anti- fraud measures effectively, their by creating a feeling of safety among customers (Rauyruer and miller, 2007). This feeling of safety likely improves customer relationship quality and customer loyalty, which are key success factors in the highly compactable retail banking industry (Alexander and colgate 2000)
The aim of this study is to empirically assess the impact of customer familiarity with and knowledge about fraud prevention measures on the current quality as well as future potential of banks-customer relationships. In so doing, we make several contributions to the bank marketing literature; first develop a comprehensive frame work of fraud management in retail banking by integrity key concept from the relationship. Marketing customer loyalty, as well as fraud prevention literature, second, by empirically testing this conceptual frame work using an extensive set of survey data, we are first to show how fraud prevention measures and their effective communication are capable to improve customer relationship quality as measured by customer satisfaction, trust and commitment. moreover, we show how customer relationship quality subsequently translates into customer loyalty as measured by their tendency to continue the current relationship with a bank and to extend and to enrich it through cross- buying from that bank. Thirdly, we identify how both situational factors (e.g a customer’s prior fraud experiences) as well as socio-demographic factors (e.g a customer’s age, gender, income and education) moderate the prior relationships. The remainder of this study is organized as follows sections 2 reviews relevant literature. Section 3 introduces the conceptual frame work; section 4 presents the research design. Section 5 empirically test the conceptual frame work and concludes.
1:1 BACKGROUND OF THE STUDY
The bulk of fund required by the investing sector of most developed and developing business economy of the world is provided by banking industry of the main, the service of mobilizing fund from saving that is simple investing sector provided by the banking industry accounted for the high status the banking industry is placed to the development of any economy. The rate of economic development of the nation has been very closely associated with the effectiveness and efficiency of the banking system of the nation.
A commercial bank (first bank of Nigeria plc Okpara avenue Enugu) as a case study of the research work provided services like acceptance of deposits, size keeping of valuables, offering of pieces of advice on investments, credit create and other business published to the gazette by the governor of central bank, designated to commercial banking business of all the components of the banking system. Incidence of fraud, occurrence of fraud is also found in other spheres of life in government commercial and industries.
Special organization has been formed to control it. Interlope tries to control it at the international level but it has not been rechecked to the barest minimum neither has it been fully eradicated.
Fraud is a complex universal phenomenon; it is rampant in both developed and developing countries and varies across time and places in its magnitude, its effects on administrative, performance development, political, economical, social, culture and attitudinal factors combined in contributive and circular and they extend from the boundaries of nation states.
Fraud is a matter of individual choice and opportunity. Being human, an individual usually takes advantage of the opportunities he sees and he is reasonably convicted that he can get away with it. The banking sector provides such opportunity in abundance as they deal with cash and near money instrument
BRIEF HISTORY OF FRAUD IN FIRST BANK OF NIGERIA PLC OKPARA AVENUE ENUGU
In the history of Nigerian banking, if total of 185 banks were registered by the financial secretary to the colonial administration to carry out banking business from 1892-1952 was known as the era of free for all banking business blossowned, there were high expectation was never observed. As in the first help of 1950 the industry collapsed. Many banks folded up as a result of fraud in commercial banks.
We are aware that fraud out cross all sectors of the economy and that the size of an enterprise usually determines the value of fraud penetrated. We also not unaware of man power and man power training, poor internal control system, inadequate incentive and unsuitable legal frame work for dealing with offenders playing the perpetration of fraud.
In addition to this lack of commitment on the part of staff and the employment policies of some banks tends to make fraud and forgeries attractive. Be that as it may we consider that higher rate of fraud in banks as clearly unacceptable; something adroit ought to be done so urgently to stem the tide in view its image implication for the banking industries and the rises of confidential which could endanger bank customers.
We therefore urge bank executive and management to as a matter of urgency to adopt strategies that will block all “loopholes” that encourage fraud in their organization.
In specific terms, we counsel that banks should critically examine option for prevention and timely detection of fraud and forgeries as these are likely to scare perpetrators. Adequate internal control such as re-deployment of staff and adequate internal check without notice should be put in place. Staff should be kept abreast of sophisticated and other development through continues training.
Bank staff should be adequately remunerated; staff in a banking environment may constitute a menace to the system as temptation are likely to be quitted and the urge to a succumb becomes irresistible.
I believe that computerization can go a long way as a strategy for internal control in banks. I therefore urge all banks to embrace and install computers in their organization. No effort should be spread in the fight against this hydra headed phenomenon (fraud) in order to reduce to the barest minimum the crisis of confidence that found occasion.
1:2 STATEMENT OF THE PROBLEM
Fraud in banks has become so recruitment in the headlines of our delay paper in such a profuse manner that they have ceased to be goal captions on these paper in going through paper on flip over pages with headlines of fraud. That notwithstanding, fraud committed has direct or indirect effect on individual or collectively, on the while fraud has contributed the liquidation of so many banks
Many bank employees has been deprived of their benefits in liquidation situations, total loss of their job is observed, on the contrary, depositors loss their money as well, the share holders of the bank loss their money.
Alongside, the great role of banking plays (which is being challenged by fraud through loss of fraud and liquidation of bank) with the degree of fraud observed now if allowed to strive now without the development of a new technique to prime down the incidence of fraud occurrence in the banking system, the future of the Nigerian economy is bound to fall.
Recognition of the aforementioned facts, researcher intends to investigate and evaluate the fraud control techniques, types and effects of fraud will be viewed.
1:3 OBJECTIVE OF THE STUDY
- To determine the extent by which fraud control techniques employed by first bank of Nigeria plc Okpara Avenue Enugu is effective and efficient.
- To determine the causes of fraud in first bank of Nigeria plc Okpara Avenue Enugu.
- To determine the effects of fraud first bank of Nigeria plc Okpara Avenue Enugu.
- To determine the steps that can be taken to improve the fraud control techniques in use.
- To determine the people that is behind the fraud committed in first bank of Nigeria plc Okpara Avenue Enugu.
- To determine whether there are frauds cases in first bank of Nigeria plc Okpara Avenue Enugu currently.
- To determine whether the use of computers can be of help in controlling fraud in first bank of Nigeria plc Okpara Avenue Enugu.
1:4 RESEARCH QUESTIONS
- Are fraud control techniques in use by first bank of Nigeria plc Okpara Avenue Enugu effective and efficient?
- What are the causes of fraud in first bank of Nigeria plc Okpara Avenue Enugu?
- What are the effects of fraud in first bank of Nigeria plc Okpara Avenue Enugu?
- What steps can be taken to improve upon the fraud control techniques in use
- Who is responsible for fraud committed in first bank of Nigeria plc Okpara Avenue Enugu? The top management, middle managements or low management or customer.
- Are there fraud cases in first bank of Nigeria plc Okpara Avenue Enugu? Currently.
- Can use of computer help in controlling fraud in first bank of Nigeria plc Okpara Avenue Enugu?
1:5 SCOPE OF THE STUDY
The scope of study of the research work is all about first bank of Nigeria plc Okpara Avenue Enugu. The scope is broad, only specific emphasis is made on first bank of Nigeria plc Okpara Avenue Enugu? Subject to the fact that incidence of fraud is pronounced in first bank of Nigeria plc Okpara Avenue Enugu? Than discipline.
1:6 SIGNIFICANCE OF THE STUDY
The intention of this research work is to help relegate the incidence or menace of fraud to a minimal level never to extermination, therefore this research work would be of immense help to the first bank of Nigeria plc Okpara Avenue Enugu. Equally, it would be a great help to other disciplines of endeavor that has the need to control the incidence of fraud.
The recommendation and suggestion made in this research when employed by the first bank of Nigeria plc Okpara Avenue Enugu will help in controlling the incidence of fraud. With positive and proper utilization of the suggestion and recommendation, efficiency and effectiveness in banking business will be forestalled and no doubt the lost glory of banks will be restricted
Also, the research work would be of great material to bankers that wish to conduct further studies on fraud generally or even as a division and limitation to first bank of Nigeria plc Okpara Avenue Enugu. Fraud control techniques which this research is basically carried on, is a division from the central concept (FRAUD).
It will also be of good help to small scale individual who are trying to improve in their business. Also limited liability companies in order to control and detect fraud easily in the organization. This research will also be of good help to government. It will enable the government to detect fraudsters in the society as well as preventing the incidence of fraud entirely.
1:7 LIMITATION OF THE STUDY
Despite the effort put in this research work certain constraints has been encountered. These are as follows: –
- Time: The time given for this research work was not enough to obtain all the necessary information; I encountered time factor constraints in carrying out this research work.
- Nature of the Research: This is one interest of this research work; fraud is a menace to first bank of Nigeria plc Okpara Avenue Enugu as it gives a bad image of the company especially in banks. Some of the staff and persons could not give a true to the issue of fraud. This contributed to the hindrance in obtaining proper information.
- Unwillingness: Unwillingness of the respondent to offer information is another limitation for instance for instance bank and some financial institution are on the oath that no staff should disclose certain information to the outsiders. In this case it very possible that all the information needed by me the researcher from banks will not be given to me, again this issue of fraud is one of the most important information that is kept secretly in the bank or by customers who are fraudsters.
- Finance: Without money it will be impossible to carry out this research work. Lack of enough finance has contributed so much to the limitation of this research work.non availability of transport fare to the area where information will be obtained and lack of money to get some materials needed for the research work also contributed to the limitation.
1:8 DEFINITIONS OF TERMS
- Fraud: This is crime of deceiving in order to get money or goods illegally it can also be seen as a person who pretends to have qualities, abilities etc that they do not have in order to deceive other people.
- Liquidation: The action of liquidating. It is an act to cause a business to close, so that its assets can be sold to pay its debts.
- Techniques: A particular way of doing something especially the one in which a person have leaned special skills. The skills which somebody is able to do something practically.
- Appraisal: A judgment of the value, performance or nature of somebody or something. it is also when a person examine something or someone in order to judge their qualities success or needs.
- Commercial: It is associated with buying and selling of goods and services, it is also making or intended to make profits.
- Bank: An organization where people and business can invest or borrow money, change it to foreign money e.t.c or a building where services like loan to start up a business are offered.
- Cheques: This is seen as a printed form used instead of money to make payments instead of your bank account.
- Money: The coins or notes which are used to buy things or the amount of these a person has. it can also be seen as a medium of exchange
- Loan: This is the act of borrowing or lending something or money from a bank to pay back at a particular time.
- Defalcation: A reduction in the amount of money in a country’s so that prices fall or remain the same.
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