THE EFFECT OF UNEMPLOYMENT RATE ON FRAUD IN NIGERIA BANKING SECTOR
ABSTRACT
The purpose of this research work is to
determine The effect of unemployment rate on fraud in Nigerian Banking sector. This work employed secondary source of data. Secondary data were obtained
from the audited annual reports of the quoted banks in Nigeria, central bank of
Nigeria, Nigerian Deposit Insurance Company and National Bureau of Statistics
over the period 2009 – 2018. This study adopted both descriptive and inferential
statistics to analyse the collected data.
Findings discovered that the number of fraud cases increased progressively over
most of the years of study. This can be attributed to increased bank products
most of which were electronically based. The above view was affirmed by NDIC
annual report (2011), which stated that increase in cases were due to Automated
Teller Machine (ATM), ATM transactions, internet banking, fraudulent
transfer/withdrawals through insider facilitations and suppression of customer
deposit. Similar report was raised in 2015, where it was reported that total
loss sustained to internet banking was N857 million representing 27 percent of
the total loss in the industry for the year. The work concluded that fraud has
adverse effects on Nigerian banking industry. Specifically, it was discovered
that fraud has negative but insignificant relationship with bank profits.
Again, the study found a positive but insignificant relationship between fraud
and bank assets. Lastly, the study established a positive though insignificant
relationship between fraud and bank deposits.
TABLE OF CONTENTS
Title Page i
Certification i
Dedication ii
Acknowledgement iii
Abstract iv
Table of Contents v
Chapter
One 1
1.1 Introduction
1
1.2 Statement
of the Problems 2
1.3.0 Objective
of the study 3
1.3.1 Research
Question 3
1.3.2 Research
Hypothesis 3
1.4 Significance
of the Study 3
1.5 Scope
of the Study 4
1.6 Limitations
of the Study 4
1.7 Operational
definition of terms 5
Chapter
two 6
2.1 Conceptual
Review 6-12
2.2 Theoretical
Framework 12-14
2.3 Empirical
Review 15-19
2.4 Gap
of the Study 19
Chapter
three 20
3.1 Introduction
20
3.2 Research
Design 20
3.3 Data
specification 20
3.4 Data
collection 20
3.5 Diagnostic
text 21
3.6 Data
Analysis 21
3.6.1 A prior
expectation 22
Chapter
Four 23
4.1 Introduction
23
4.2 Diagnostic
text 23
4.3 Data
analysis 23
4.4 Correlation
analysis 24
4.5 Discussion
of findings 29
Chapter
five 30
5.1 Introduction
30
5.2 Summary
of Findings 30
5.3 Conclusion
33
5.4 Recommendation
34
5.5 Limitations
of the study 35
References
CHAPTER ONE
1.0 INTRODUCTION
Banks all over the world
have through their unique position in an economy, contributed immensely to the
economic growth and development of a nation. Therefore any problem that tends
to hinder their operation such as ‘fraudulent practices’ is often viewed with
seriousness. For long, Nigeria’s financial system has suffered from fraudulent
practices perpetrated by bank employees, people outside the banks as well as
cooperative bodies. This situation became worrisome between the periods of 1992
– 1995 with unprecedented upsurge in bank fraud, particularly with the New
Generation Banks (NGBs). These malpractices have led to unhealthiness and
technical insolvency of Banks and total collapse. Bank frauds all over the
world were perpetrated essentially for selfish economic benefits. Thus,
according to Ajamole (1990) in (Emergence of Computerized Banking) he defined
fraud “as an act or course of deception, deliberately practiced to gain
unlawful or unfair advantage to the detriment of another”. Any act of unfair dealing
whether against the bank by its customers or against the bank by its officers or
against the customers by the bank, (including its officers) is regarded as
fraud.
Various fraud practices
have been reported and most of these cases have been tried in various courts
and bank malpractices tribunal. Since the introduction of the Failed Bank
Tribunals, some measures of sanity now reign in the banks.
Unemployment has become a
major problem in Nigeria and millions of graduates and school leavers are busy
roaming the streets in search of elusive jobs. However, government at all
levels is paying lip service to creating employment opportunities for the
people. As the mass of the unemployed roams the street, government officials,
elected and appointed, are busy enlarging their coast at the expense of the
people. While the people are groaning under the eight poverty and penury, the government
is busy reeling out statistics that the economy is growing. Some of the
unemployed youths have died of frustration; while many are persevering, hoping
that life will better for them.
Before penultimate
Saturday, March 15th national tragedies, the common parlance in the country has
seemingly been that unemployment situation is under control with pockets of low
and high profile criminal job scams recorded mostly in urban centres and
reported accordingly. As reported below, official statistics have seemed to
support the really a threat in the scheme of thins in Nigeria, even when it is
an incontrovertible fact that compared with most advanced economies of the world
like Japan and Britain, the unemployment rate in Nigeria is quite
mind-boggling.
1.2 STATEMENT OF THE PROBLEM
The central bank of Nigeria attributed the backward
development in the nation’s economy to weaknesses in the internal control
system and operational procedures of banks CBN, (2010).
This has therefore given a picture of how fraud and
other financial mismatch have eaten deep into the financial strength of
Nigerian banks therefore, the damage which the menace of fraud do to financial
sector in particular and the nation’s economy at large is immeasurable and grave.
Hence the hazard of banking fraud to nation’s economy, the need for proper
banking operation efficiency and an attempt to put an end to this economic
degradation is a motivation for this study.
No research work has dealt on the direct impact of
banking fraud to Nigerian economy. The extant of literature are therefore
saturated with knowledge on the effect of fraud to organizational performance,
and with special emphasis on banking industries. The nature, types and causes
of fraud have effect on the industry are mostly discussed in the present
literature, and perhaps it influence on the micro economy. Little evidence is provided
on the direct relationship of banking fraud on the nations’ economy, given the importance
and the value that the sector has to Nigerian economy. These omissions in the literature
therefore form a major gap in this study and it is against this back drop that
this study is conducted to find out empirically the influence of that fraud and
fraudulent activities have on economic variables such as Gross domestic income,
per capital income and employment rate.
This study therefore, is an attempt to examine the
extent to which banking fraud and other unethical practices have impacted on
the national economy generally.
1.3 OBJECTIVES OF THE STUDY
The main objective of this study is to determine the
effect of unemployment rate on fraud in Nigeria banking industries, other
objectives are:
i. To identify the cause(s) of fraud in
banks,
ii. To identify the various types of fraud
perpetrators in banks,
iii. To identify the various means employed in
defrauding banks,
iv. To determine the effects of fraud on the
customer deposits.
1.4 RESEARCH QUESTIONS
I. what are the causes of fraud in
banking sector?
II. How does a fraud practice and types of
fraud in the bank affect the banking business?
III. What are the various means employed to
defraud banks?
IV. what are the effect of fraud on deposit
of customer?
1.5 RESEARCH HYPOTHESIS
Hoi: Causes of fraud in banking sector has
significant relationship to banking business.
Hoii: Causes of fraud in banking sector did not has
significant relationship to banking business
Hi: Fraud practice and type of fraud in bank has
effect on bank activities
Hii: Fraud practice and type of fraud did not
have effect on bank
1.6 SCOPE OF THE STUDY
This project entitled “Effect of Unemployment Rate
on Fraud in Nigeria Banking Industry” focused on fraudulent activities in the
banking sector. The project covers the act of fraud and forgeries in the banks,
the effects it has on the banks and means of correcting the anomalies. In order
to attain the objectives of this research work, the scope of the study has been
defined to embody all relevant aspects of fraud in banking operations.
1.7 SIGNIFICANCCE OF THE STUDY
The significance of this study is to highlights the
immediate and remote causes of fraud practices, effects, prevention, and
control in Nigeria Banking System with particular reference to Union Bank.
Several attempts have been made by researchers, writers e.t.c. On how to
minimize or eradicate it if possible. In various organizations but such efforts
have been focused mainly on manufacturing and distributive as well as public
finance management. The studies have been geared towards finding out causes and
consequences, prevention and control of frauds in Nigeria Banking Industry. Therefore,
the suggestions that are advanced in this study would no doubt be useful not
only to the banking industry but to all financial institutions be it public or
private sector of the Nigerian economy. The content of this research and the
suggestions to be proffered will serve as resources for further study in the
same or similar areas I Banking and other financial institutions particularly
in the area of fraud practices (internally) prevention and control.
1.8 DEFINITION OF TERMS
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