AN INVESTIGATION INTO THE STRATEGIES TO MINIMIZE FRAUD IN NIGERIAN COMMERICIAL BANKS

CHAPTER ONE

INTRODUCTION

1.1  BACKGROUND OF THE STUDY

It has been in a leading position of life and sustainability in Nigeria since its birth and acknowledgment. This is because, since the inception of this field of economic and business awareness, bribery and other manifestations of dishonesty, as well as the misappropriation of funds entrusted to one, have disproportionately affected Nigerian banks. This flaw has been lingering in the minds of honest bank employees and students majoring in banking, giving potential thought to the near future perfection in banking and finance as a discipline. Fraudulent activities in Nigerian banks have grown in power, rigor, and vigor that most banks are exposed to great risk in losses inspire of all modern sophisms.

 According to Potter (1974), the banking sector is the backbone of any emerging and industrialized economy on the planet. As a result, it's critical to identify any issues that threaten to affect certain sectors. Any transaction of foreign exchange goes through banks, and the course of every economy across the world is determined by this. Since industrial development and project financing are both done through banks, any worthy patriot of this great nation should be concerned about eradicating fraud in banks. Fraud is an international misrepresentation consentient for the purpose of inducing a mother in reliance upon it to pant with any valuable things, money properties belonging to him, or to surrender in general. While bank fraud is not an unusual or unforeseen occurrence in our nation. It's concerning that "of all the different challenges that the Nigerian banking industry faces today, fraud is by far the most difficult to solve."(Umoren, 1985)

The banking sector is more concerned with bribery because of the apparent negative effects of such actions on people's health and the institution's life. The term "fraud" implies fraudulent theft, according to the Oxford Advanced Learner Dictionary of modern English. This is an easy-to-understand term. The great master dictionary Hamlin Encyclopedia world dictionary describes "fraud" as "deception": "a tricky sharp practice or breach of trust by which anyone who tried to achieve an unjust or unethical advantage by some deception artifice and trick." (Potter 1974) Furthermore, the word "fraud" may be interpreted in a variety of ways. In the eyes of a civil court of justice, "fraud" may be described as any act, omission, or concealment that involves a violation of lawful or equitable dusty trust of confidence justified reposed and is harmful to another, or through which an under or unconscionably advantage is taken of another.

Finally, Wale Adewuni as cited in Umoren (1985) defines fraud as a deliberate, premeditated action taken by an individual or group of people with the intent of changing the reality or evidence for personal financial benefit. It necessitates the usage of deception and trickery, as well as, on occasion, extremely intellectual cunning and know-how. This can arise as a consequence of a lack of strict attention to known and existing rules and regulations in individual banks, and this has contributed significantly to the increase in fraud in our banks, which is a really poor thing to suggest.

These trained experts are often in charge of these banks' management levels. Due to a lack of built-in accountability devices, such as routine auditing of consumer accounts, these banks do not seem to organise fraud seeming to discuss the issues fraud causes them and fine out those that render fraud inevitable in their banks, as well as alternatives to these problems. The banks' recruiting and preparation policies are ineffective.

1.2  STATEMENT OF RESEARCH PROBLEM

The proposed goal of this project is to find ways to reduce fraud in Nigerian commercial banks, as fraud has been a major cause of bank failure in the country. It is past time for us to look at fraud and how it can be minimized in Nigerian banks, as this act threatens to erode people's confidence in the country's financial institutions. At this stage, it appears important to pursue solutions to this issue that would eliminate fraud in Nigerian banks. Fraud is the adversary of the Nigerian financial industry, and it is more readily available in the banking industry than everywhere else. It is the leading cause of bank loss, so a remedy must be found so that an assessment of bank success in Nigeria can be made as fraud is minimized.

1.3  OBJECTIVES OF THE STUDY

1.      To determine the extent of fraud in Nigerian Banks.

2.      To examine the effects of fraudulent activities on banks in Nigeria.

3.      To examine crucial strategies in minimizing fraud in Nigerian banks.

1.4  RESEARCH QUESTIONS

1.      What is the extent of fraud in Nigerian Banks?

2.      What are the effects of fraudulent activities on banks in Nigeria?

3.      What are the crucial strategies in minimizing fraud in Nigerian banks?

1.5  SIGNIFICANCE OF THE STUDY

The study will be crucial to the necessary governing bodies and various banks in Nigeria as the study looks at various strategies in minimizing fraud in Nigerian banks. This study will also be crucial to other researchers who want to broaden the reach of this study.

1.6  SCOPE OF THE STUDY

This study covers only the necessary strategies to minimize fraud in Nigerian banks. The study will go further to determine the extent of fraud in Nigerian banks and the effects of fraudulent activities on banks in Nigeria.

1.7  LIMITATIONS OF THE STUDY

This study was faced with insufficient time and resources. The researcher did not have enough time and resources during the course of this study.

1.8  OPERATIONAL DEFINITION OF TERMS

1.      FRAUD: This means criminal deception or any act of this kind. Getting money by deceit is called fraud. One who engages in a fraudulent activity is called a fraud. stain

2.      BANK: is a corporation or person or persons who accept money on current accounts, pays cheques on such accounts on demand and collects cheques for customers.

MINIMIZATION: reduction brings some things down to their lowest level.