Fraud and Performance of Deposit Money Banks

John K.M. Mawutor, Augustine Enofe, Kemebradikemor Embele, Anayochukwu R. Ndu, Oluwaseyi E. Awodola


Banks serves as an indispensable part of the financial system, performing a crucial role in intermediation which results in a flow of financial resources in an economy. However, the recurring nature of fraud has hindered the effective performance of Deposit Money Banks (DMBs). The broad objective of this study was to examine the impact of fraud on DMBs in Nigeria. The study was driven by the positivist research philosophy. Hence, the study adopted a quantitative research design using the ex-post facto strategy. Data was sourced from the Nigeria Deposit Insurance Corporation (NDIC) annual reports covering the period of 2006 to 2016. The Ordinary Least Square (OLS) was used to predict the impact of fraud on DMBs after fulfilling major regression assumptions. It was revealed that total fraud amount was negative, although insignificantly affect the performance of DMBs; the number of reported cases significantly and positively affect the performance of DMBs and lastly it was discovered that the total staff involved also significantly and positively affect the performance of DMBs in Nigeria. Therefore, the study concluded that the impact of fraud in the banking sector affects the performance of DMBs in Nigeria. The regulation and supervision of DMBs should be stricter, that is, the CBN and NDIC should tighten their grip in regulating and supervising so as reduce the increasing fraud incidence.  

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