Fraud Detection in the Banking System in Nigeria: Challenges and Prospects

B.A Badejo* -  Geography and Regional Planning, Department of Geography and Planning, Olabisi Onabanjo, University, Ago-Iwoye, Nigeria, Nigeria
B.A Okuneye -  Department of Economics, Olabisi Onabanjo University, Ago-Iwoye, Nigeria, Nigeria
M.R Taiwo -  Bursary Department, Olabisi Onabanjo University, Ago-Iwoye, Nigeria, Nigeria

Fraud is an epidemic dimension that has eaten deep into the banking sector as well as the entire economics in Nigeria. Its devastating effect manifests itself in the deteriorating balance sheet of banks as well as in economic backwardness. Apparently, measures to detect and eradicate fraud in banking sector have been quite ineffective as the fraudulent practices have been on the increase in recent times. Thus, this study evaluates the various challenges of detecting and combating fraud in the banking sector in Nigeria. The results from the descriptive analysis showed that lack of adequate motivation is not a major cause of fraud in banks, looting of fund by bank managers and directors constitutes the major form of fraud in Nigeria. Furthermore, it is recommended that government should strengthened existing anti-graft agencies and to enhance their financial independence. Those managers and director involved in looting of fund should be persecuted to serve as a deterrent to potential fraudsters. In addition, bank staff should be properly screened to test their morality and integrity before recruitment. Adequate internal control mechanism should be established to serve as check and balances among the bank staff. There is also the need for the anti-graft agencies to be strengthened in order to adequately complement the effort of the Central Bank of Nigeria (CBN) at nibbling the incidence of bank fraud in the bud.

Keywords:  banking system, fraud, fraud detection, fraud prevention, Nigeria

  1. Adeoti, J. O. (2011). “Automated Teller Machine (ATM) Frauds in Nigeria: The way out,” Journal of Social Sciences, Vol. 27 (1), pp. 53-58.
  2. Aderibigbe, P. (1999). “The Internal Audit Function And Fraud,” ICAN News Vol.4, No. 1.
  3. Adeyemo, K. A. (2012). “Frauds in Nigerian Banks: Nature, Deep-seated causes, Aftermaths and Probable Remedies,” Mediterranean Journal of Social Sciences, Vol 3(2) May.
  4. Ajisebutu, A. (2006). “Financial Statement Fraud: What Auditors Should Know,” The Nigerian Accountant, Vol 39(2).
  5. Akinyomi, O. J. (2010). “The Effect of Internal Control System on Nigerian Banks,‟ International Journal of Accounting, Vol. 2 (1) pp. 123-129.
  6. Asukwo, P. E. (1999). “Bank Frauds: A Look at the Nigerian Banking Clearing System,” ICAN News, January/March.
  7. Carmody, P. (1998), “Constructing Alternatives to Structural Adjustment in Africa,” Review of African Political Economy (ROAPE), Vol. 25, No 75.
  8. Eseoghene, J. I. (2010). “Bank Fraud in Nigeria: Underlying Causes, Effects and Possible Remedies,” African Journal of Accounting, Economics, Finance and Banking Research. 6(6): pp. 62-79.
  9. Fakunle, B. (2006). Audit Companion, 2nd Edition. Lagos: L and Mark Publication.
  10. Idolor, E. J. (2010). “Bank Fraud in Nigeria: Underlying Cause, Effects and Possible Remedies,” African Journal of Accounting, Economics, Finance and Banking Research, Vol. 6 (6), pp 62.
  11. Idowu, I. (2009). “An Assessment of Fraud and its Management in Nigeria Commercial Banks,” European Journal of Social Sciences, Vol.10 (4), pp. 628-640.
  12. Nigeria Deposit Insurance Corporation (NDIC) Annual Report and Statement of Account, Various Issues. Lagos, Nigeria.
  13. Ogidefa, I. (2008). Fraud in Banking Systems in Nigeria (online) available via http://www Fraud-in-banking-system-in-Nigeria.
  14. Ogwuma, P.A. (1981). “The Growth of the Banking Industry in Nigeria,” Paper Presented at the Annual Seminar of the Chartered Institute of Bankers of Nigeria, Bankers House, Lagos State.
  15. Okubena, O. O. (1998). “An Investigation in Frauds in Banks,” An unpublished Thesis of University of Lagos, First Bank Quarterly Review June 1998 Edition.
  16. Olatunji, O. C. (2009). “Impact of Internal Control System in Banking Sector in Nigeria. Pakistan Journal of Social Science,” Vol. 6, pp. 181-189.
  17. Onibudo, A.T. (2007). “Bank Frauds Problems and Solutions,” Unpublished B.Sc. Research Project, University of Benin, Nigeria.
  18. Ovuakporie, V. (1994). Bank Frauds: Causes and Preventions. Ibadan: ATS Book.

Shirkah: Journal of Economics and Business
Published by Faculty of Islamic Economics and Business (FEBI)
Institut Agama Islam Negeri Surakarta, Indonesia
Jln. Pandawa No. 1, Pucangan, Kartasura, Central Java, Indonesia, 57168
Phone: +62271-781516

P-ISSN :2503-4235 | E-ISSN : 2503-4243

This ejournal system and it's contents licensed under
a Creative Commons Attribution-NonCommercial 4.0 International License