This research study examined frauds in the Nigeria banks. It is being directed at the causes, effects and the various controls in the banks and the finance industry as a whole. The study delved deeply into the issue of types of frauds and ways of defrauding banks, causes of bank fraud, the effect on the banking business and the effectiveness of frauds, preventive measure i.e. the control measures. Data were got from both primary and secondary source. Mainly from the primary source which were collected from respondents in universal banks within Port Harcourt through questionnaires and personal interview which were analyzed. The hypothesis to the objective of the study were tested using the statistical tool known as spearman rank order correlation coefficient. The test confirmed that there is a significant relationship between bank frauds and the level of banks profitability. The internal control measures to reduce the occurrence of frauds in the banking industry were also evaluated. The inference is that fraud may be kept at reasonable limit in banks if there is:
(a) Regular balancing of accounts
(b) Adequate managerial supervisions. These are the major ones.
Based on the findings, the following recommendations were made.
1. Banks should carryout research on frauds regularly as method employed by fraud varies with time.
2. They should also tighten their internal security measures on internal control systems.

Basically, banks as a financial industry and as the most dominant financial intermediaries are seen as an important segment in every economy which the Nigerian economy is not an exemption. It constitutes of the pillars on which the activities and survival of any economy or nation can be built upon and therefore its maintenance should be of a paramount concern to the government and regulatory bodies of the nation.
As amended in the Nigerian Banking Act of 1969, the term bank was interpreted as meaning any person who carries on banking business. But according to “Lord Paget”, a bank or banker is defined as a corporation or person (or group of persons) who accepts money on current accounts, pay cheques drawn upon such accounts on demand and collect cheque services are afforded to all and Sundry without restriction of any kind, the business is banking business whether or not is undertaken at the same time.
The banking industry in the previous days witnessed a tremendous growth on the opinion which is borne-out by the number of banks and branches, their total deposit total investments, total loans and advances and the profitability of the industry. But in the recent times has been faced by various problems of which includes inadequate capital base, poor management, low profitability, fraud and forgeries have assumed unprecedented dimension. Though the problems seem to be global in nature, their growth in the Nigerian economy has been so astonishing.
The magnitude of fraud seems not to be known because much of it is undiscovered and undetected and even those detected are not often published. The canker warm of this problems to the banking industry poses to their funds, and the ugly consequences is that a majority of banking public loosing confidence in the banking industry and this results to loss of customers to the banks, depletion of shareholders funds as well as banks capital base and loss of confidence in the banking system which ultimately leads to insolvency of the banks and eventually precipitate bank failure (Ovuakporie, 1994:13) hence the entire economy is negatively and significantly affected. This is why (Ovakporie 1994:9). However, believes that poor management of bank must have increased its incidence and responsible to the distressed and failed banks.
However, the banking industry comprises of commercial banks, Merchant banks, Mortgage banks, which are now known as universal banks, development banks and Micro-financed banks. And above all, at the apex is the Central Bank of Nigeria. in all the problems of fraud and how best to manage it has became a very crucial issue in this institution. But however, for the purpose of this research study, emphasis will be placed solely on selected universal banks because of its core position in the banking industry.
Furtherly, fraud according to Armed (1990:104) can be defined as “any deception practices to (heat or deceive another to his own detriment or to the detriment of any loss or injury, while the perpetrator has a clear knowledge of his deliberate falsehood deception or advantage over his innocent or unsuspecting victim” causes of frauds, usually, are grouped into two different classes, the institutional causes of frauds and the environmental/social factor. The institutional causes of frauds includes volume of work, nature of staff, negligence, recruitment system, poor security arrangement for documents, inadequate infrastructure, delays in procuring documents, lapses in the management control system of corporate customers and negligence by customers. While the environmental/social factors are caused by personality profile of dramatize personal, society value, slow and tortuous legal process, lack of efficient determent/ punishment and fear of negative publicity. The consequences and effects of frauds in the banks can be grouped into three. Thus, the effect on the bank itself and the shareholders, the consequences on depositors and other customers/ users and the impact on the entire economy.
Frauds in the Nigeria Universal Banks reflects lapses in the control system. Despite efforts made towards control measures that will make fraud more difficult to execute and easier to detect, the problem of fraud skill lingers in our banks today. it is on this occasion and background that this research topic comes to play.

According to Baridam (1995:22), the statement of the problem in research writing constitute the cornerstone upon which the research plan is based, therefore, this is an important and a crucial step in the entire process of a research study.
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 smooth operation such a “Fraudulent Practices” is often viewed with seriousness.
However, this banks having cash and cash equivalent as their principal commodity of trade are highly volatile and susceptible to various devices and manipulation armed at defrauding them. Activities of fraudsters in the banking industry are highly unpredictable and their methods operations keep changing with changes in banking operations. The Nigerian financial system has suffered from fraudulent practices perpetrated by employees, people outside the banks and by bank as corporate bodies. The situation became worrisome between the period 1992-1995 with unprecedented upsurge in bank fraud, particularly within the new generation banks.
These malpractices have led to the unhealthiest, technical insolvency of banks and total collapse. The magnitude of this problem and its implication to the banking industry has therefore inspired this research study on frauds in the Nigeria universal banks.

The primary objective of this research is to find practical means of minimizing the incidence of frauds in our banks and also the ways in which they can be prevented and controlled. To achieve these objectives, the following secondary objectives have been specified:
1. To know what is actually meant by fraud
2. To find out the extent of fraudulent practice that really occurs in the banking industry, particularly those of universal banks
3. To know the causes of frauds and its effects in the banking industry
4. To ascertain the classes of people that commit fraud in bank
5. To ascertain the effectiveness of banks practices and policies in managing frauds
6. To know if poor management of frauds is among the major factors affecting banks performances/profitability.
7. To make recommendation on how to manage frauds effectively and efficiency

From the statement of the problem and objective of the study above, this study has to provide answer to the following questions
1. Is there any relationship between the use of computers in banks and the level of frauds and profitability?
2. Is there any relationship between computerization, the incidence of frauds in banks and the level of banks performance?
3. It there a relationship between bank frauds and consumer patronage?
For the realization of the objectives stated above, the following hypothesis has been stated.
Ho2: There is no significant relationship between the level of banks performance, computerization and the incidence of frauds in banks.
Ho3: There is no significant relationship between bank frauds and consumer patronage.

The relevance of this study is to carry out an enquiry in the causes of frauds in banks in order to make certain recommendations which will help banks to curb the actviites of fruadsters.
Also, as it is the duty of research to help generate new ideas, provide for their critical evaluation and to examine effectiveness of existing pratices, this study will identify, the sources of causes of fraud, examine problems problems and impediments and suggestions on what can be done to minize bank frauds to the full benefit of the economy.

Some terms has been defined below for a clearer understanding of this study thus:
Banking: This is the business of receiving and paying money as deposits and safe-keeing of other valuables.
Fraud: This is a willful premidated action of a person or group of individuals with sole aim of altering the truth or for selfish monetary gain.
Forgery: Forgery is an alternation of any document with an intention prejudicing another person.
Fraudster: A person who commits frauds
Fraudulent: This is an attempt to deceive
Cop: Range of opportunity
Research: Systematic investigation and study of material sources in order to establish facts and reach conclusions.
Study: Acquisition of knowledge, especially from books, journals, magazines, periodicals etc.
Perpetrate: To commit crime, blunder or anything outrageous.

The study covered some selected universal bansk within Port Harcourt metropolis as regards to their opinion concerning the causes of frauds and how best they think effectivie management of fraud could be achieved in the banking system.
However, the study is first limited by the scope which is only Port Harcourt. More reliable responses could have been gotten if wider scope had been covered. But the scarcity of certain secondary materials required served as part of the hindrance to this study. During the distribution of the questionnaires, some of the respondents were reluctant to answer some of the questions in the questionnaire and during interview, other constraints to this study were time and financial constraints. Meanwhile, the researcher was able to resonably minimize the effects of these constraints, make this research reliable and valid by making sure that much greater numebr of the questionnaire distributed were engaged on by the researcher. The respondnets used was mainly the bank managers.

The chapter 1 which is this particular chapter introduced the study topic, indentified the purpose of this research, the research questions, hypothesis, the significance of the study and the limitations as well as the scope which inadequacy of data was a very prominent.
Chapter 2 deal s with the relevant literature review which includes the types of fraud and ways of defrauding banks, causes of banks frauds, effects of fraud in banks and the measure for controlling fraud in banks. Most of which appeared with the names of the authors and the materials as the law of this chapter and the relevance of the literature.
Chapter 3 discusses the methodology, the research design, sampling procedure/sample size determination, the data collection method, operational measures of the variables and data analysis technique(s).
Chapter 4 will discuss the analysis of various causes of fraud filed with questionnaire distribution and collection, effective management of fraud, ineffective management of fraud etc. and the result obtained from testing of postulated hypothesis.
Finally, the last chapter which is the last chapter will show the discussion, conclusions and recommendations of the study.

Nwachukwu, C.C. (2004): Modern Nigeria Business Law (Students Companion)
Orji, H.O. (1989): Appraisal of the Nigerian Financial System. CBN Bullion Vol. 13 No. 2 March/April.
Ahmed, A. (1991): “The Role of Banks in Achieving a sell reliant Economy” CBN Bullion Uni. No. 1 January/March.
Roza, Lozusie (2003): Home Information Resources Research Papers Briefing paper.
Ovuakporie, V. (1994): Bank Fraud, Causes and prevention an empirical Technology types setter Ltd.
Baridam, D.M. (1995): “Research Method in Administrative Science”. Para graphics, Port Harcourt.

This chapter presents a review of past studies on frauds in banks. All the instructions given by Baridam and Avy et al shall be highly adhered to for the success of this chapter.
According to Baridam (1990:32), “It is not enough to review related literature without presenting the studies by topic determining how each of these topics relates to the researchers own study”. Further more, (Baridam, 1990:32) advises that “systematic presentation of the literature forms the foundation of the study”. Avy et al; (1972: 62), posit that “The literature should be presented in such a way as to justify carrying out the study by showing what is know and what remain to be investigated in the topic of concern; the hypothesis provide the framework for organizing the related literature”.
However, for convenience, the review is divided into the following parts. This: Banks and the Banking business, the role of banks in the Nigerian economy, the definition of fraud, types of fraud and ways of defrauding banks, causes of fraud in banks theories of fraud, effects of fraud on banks and the measures for controlling frauds in banks.

For the significant of this report, and because of the often clouded definition given to a bank, the below question comes to play:
What is a Bank?
The word bank or banking could be defined from various perspectives. Thus:
1. The bills of exchange Act (1882), defined a bank as a body of persons whether incorporated or not, who carry on the business of banking
2. The Bankers Books Evidence Act, (1879) states that the expression bank and banker mean any person, persons, partnership or company carrying on the business of banking and having duly made a return to the commissioner of Inland Revenue and also any savings banks and also any post office savings bank. The definition as at when the act was made appeared satisfactory. But the business of banking has evolved such that the banker is required to perform various roles not contemplated by the definition above.
3. Dr. Hart in his book Law of Banking, described a bank as a person carrying on the business of receiving monies and collecting drafts for customers, subject *** the obligation of honouring cheques drawn upon him from time to time by customers, to the extent of the amounts available on their current accounts.
4. following the adoption of Universal Banking in 2001, the banks and other Financial Institutions Acts 1991 was amended and banking business is now defined as “the business of receiving deposits on current, savings of other accounts, paying or collecting cheques drawn or paid in by customers; provision of finance, consultancy and advisory services relating to corporate and investment matter; making or managing investments on behalf of any person; and the provision of insurance such other services as the governor of the Central Bank of Nigeria, may by gazette designate as banking business.

The banking system in the Nigerian economy and in any economy plays the important role of promoting economic growth and development through the process of financial intermediation. Development economist argue that the existence and evolution of financial element in the process of economic growth.
According to Odufu, I. Imala (2005), the banking system in promoting economic growth, plays the following roles among many others:
 Improving the efficiency of resource mobilization by pooling individual savings.
 Increasing the proportion of societal resources investments, which in turn facilitates economic growth.
 Providing a more efficient allocation of saving into investment than the individual savers can accomplish on their own.
 Reducing the risk faced by firms in their production processes by providing liquidity and capital.
 Enabling investors to improve their perfolio diversification by providing insurance and project monitoring.
 Providing a veritable platform for an effective monetary policy implementation thereby enhancing the effective management of the economy.
 Facilitating a reliable payments system which provides support for the economy. Certain financial assets such as current accounts, deposit/savings accounts, domiciliary accounts e.t.c. which serves as medium of exchange for payments readily come of mind. Credit cards, cheques, electronic transfers are the principal means of payment today.
 Lastly, the major function of the banking system is the “provision of credit” the banking system provides credit to finance investment and consumption.

The word fraud is a very comprehensive field crime under which exists a range of activities. Arising from its diverse nature it has been difficult to proffer comprehensive definition of the term “fraud”. Fraud as we all know, is an aspect of great contemporary interest and importance to the financial institutions on particular and the country in general. It can be described as a conscious premeditated action of a person or group of persons with the intention of attaining truth and/or fact for selfish personal monetary gain, fraud is depriving others of their valuables through dishonest means. It involves the use of deceit and trick and sometimes highly intelligent cunning and know-how. The action usually takes the form of forgery, falsifications of documents and authorizing signatures and outright theft.
Fraud has been variously defined in the literature as the following:
The Oxford Advanced Learner’s Dictionary of Current English defined fraud as a criminal deception. In legal terms, fraud has been defined as the act of depriving a person dishonestly of something, which is, or of something to which he is or would or might be entitled but for the perpetration of fraud.
Gurahnik, 1970, defined fraud as deceit, tricking or cheating. Hegel, 1973, defined fraud as a threat to scruting, and it is one form of a crime.
Fagbemi 1986, defined fraud as the act of dishonestly depriving a person of something which is his or of something to which he is or would might be defined on a layman’s view as “any activity that is tainted with criminal intention to cheat on deceive”.
Archibong 1992, described it as “a predetermined and well planned tricking process or device usually undertaken by a person or group of persons with sole aim of cheating another person or organization to gain ill gotten advantages be it monetary of otherwise which would not have accrued in the absence of such despiteful procedure, Radiznoncoicz and Wolgang classified fraud together with white-colour crime and defined them as “illegal acts characterized by guilt, decent and concealment and are not dependent upon the application of physical force of violence or threat thereof.
Within this broad class of white-colour crimes, definitions of fraud had been attempted by different authors (Adewunmi, Sydney, Adekanye and Oyigkede). In their definitions they agreed that fraud is an action which involves the use of deceit and tricks to alter the truth so as to deprive a person of something which is his or something to which he might be entitled. The intention of the fraudster is to dishonestly benefit himself to the detriment of the bank or bank staff or bank customer or any other member of the public vai banking operation.
Definition of fraud is a dishonest and a shameful act that is often perpetrated and perpetuated by the customers as well as the employees of the banks thereby causing losses to innocent persons and viable organizations. It is an act of relieving others of their valuable possessions. This shameful act usually bring about an unparallel hardship to known and unknown victims of the attacker. In its classical meaning, fraud is an act of course of deception or trickery deliberately practiced in order to gain some advantage dishonestly.
For the purpose of this study, it is defined as activity that amounts to unfair dealing. There is a general consensus amongst criminologist that fraud is caused by three elements called.
W: Will
O: Opportunity
E: Exit
The will to commit the fraud by the individual, the opportunity to execute the fraud and the exit which is the escape from sanctions against successful or attempted or attempted fraud or deviant behavior. Fraud can be committed both the staff or a combination of both the staffs and customers or even third parties, i.e non-customers.
Nwachukwu, (2004) defined fraud or explained fraud to be “when untrue conclusion have been induced by representations of one party, made with the intention of deceiving.
Various scholars have defined fraud in different ways but the essential component of their definition lies in dishonesty with the primary factor of being detrimental to another persons or persons. Fraud is the intentional misrepresentation, concealment or omission of the truth for the purpose of deception/manioulation to the financial detriment of an individual or an organization (such as a bank) which also include embezzlement, theft or any attempt to steal or unlawfully obtain, missue or harm the asset of the bank (Adeduro, 1998 and Bostley and Drover 1972)
It involves the use of criminal deception to obtain an unjust or illegal advantage. It is a deliberate cheating or deception intended to gain an undue advantage.
In legal terms “It is the act of depriving a person of something which is his or of something to which he is or would or might but for the perpetrating of fraud be entitled (Ishola, 1997:25). “Fraud is also any activity that amounts to an unfair dealing” (Adewunmi 1986:30)
Fraud is “A conscious, premeditated action of a person or group of persons with the intention of altering the truth and or fact for selfish personal gain. It involves the use of deceit and trick and sometimes highly intelligent cunning and technological know how.
It is also seen as the action usually takes a form of forgery, falsification of documents, suppression of each lodgments, convance and outright theft (Adekanye, 1986:3)
Having examined the different definitions of fraud form different scholars as the researcher of this study, concurred with them.

Fraud is a global phenomenon. It is not unique to the banking industry or peculiar to Nigeria. The Nigeria society, particularly since after the civil war, it bedeviled with the desire to get rich quick. Everybody wants to make it within the shortest possible time. Because the banks deals in money and sine the ultimate ambition of the “want to get rich quick” is to acquire money, the banks have become persistent targets for fraudsters.

Since fraud arises as a result of the inefficiency of the internal control system of an organization it means that an organization maintains that cash is not spent indiscriminately, depts. Are collected promptly and bells settled in due time and to the right quarters will minimize fraudulent activities to a large extent.
Three major types of fraud could be defined namely: victim fraud, flow fraud and act fraud (Nwankwo, 1991:167)
a. Victim fraud
This comprises fraud against the bank itself, which is regarded as the victim. It includes fraud perpetrated by the employees, individuals directors and/or board of directors collectively. It is seen as fraud against the company (Bank)
In this case, the bank is the victim of any loss incurred through the fraud. Victim fraud could also be against shareholders, depositors, regulatory authorities and so on in which case the elements outside the bank i.e. against outsiders. The victims of the fraud here is an outsider to the company or bank, that is bank customers,
b. Flow fraud
Flow fraud is described by the frequency and the value involved in the fraud.
It is of two types:
i. Smash and crab: This is not frequently committed, but is high in value over a short period of time such as an electronic fund transfer and valut break
ii. Drip: This is a type of fraud that occurs frequently but in a small value. It occurs when routine controls are by-passed. It is executed successfully over a number of years without being detected i.e. payroll passing which consist of the payment of salaries, pensions, and other employments to non-existent workers otherwise known as ghost workers.
c. Act fraud:
this is the action that takes place in cases of fraud, that is the people involved in the act and the methods or forms by which these people perpetrate fraud e.g. the theft of non-monetary asset either for ones own use or assets, direct and indirect embezzlement etc. also is third party fraud perpetrated by people other than the bank or employee such as armed robbery or outright theft by outsiders perhaps in collusion with insiders.
This could also be done fraudulently by granting loan, manipulations on demand and savings accounts, personification, theft, embezzlement, bribery, instrument fraud, cheque fiddling, payroll padding etc.

In the banking industry today, fraud vary widely in nature and method of perpetration. For this reason it is grouped into 3 broad categories namely:
Internal fraud: this is fraud committed by member of staff within an organization.
External fraud: This is fraud committed by outsiders, i.e. fraud carried out by non-employees of an organization.
Mixed fraud: This is the kind of fraud that is committed by bank staff in collusion with outsiders or vice verse.
It is necessary for the management of banks, governments agencies and indeed governments to identify the categories of fraud in order to able to determine the best way out.

There are various methods by which fraud can be perpetrated in the banks and is usually not exhaustive as new methods are devised with time. So we must learn the ways of fraudsters in order to fight fraud effectively and efficiently. The most important and common methods include:
i. forged cheques:
this is by far the commonest method by which the customers and the bank are defrauded . they occur mainly in company account and are invariably perpetrated by staff within the company who have access to the company’s cheque bok.
ii. Cloned cheques and counterfeit securities cheque are cloned by fraudsters by producing the exact copy of a customers cheque. Though some features of the real banks cheques might be missing on the clones cheque and if it is not checked on the mercury lighy, it will not be noticed. So it is important to check all the check all the cheques presented across the counter on the mercury light before being honoured.
Counterfeiting of commercial financial instruments is one of oldest forms of crime. Modern photographic and printing equipment has greatly aided criminals in reproducing good quality forged instruments. The documents may be total counterfeit or may be genuine documents that are copied, forged or altered as to amount, payouts date, pay or terms of payments. A common fraud is to present the counterfeit stocks or bonds as collateral for loan. The presenter would draw out the proceeds and disappear before the financial instruments are found to be counterfeit.
iii. Signature forgery
This could be internally or externally done. In one of the banks under survey, it was stated that an accounts officers forged the signature of the branch manager to release money fraudulently but this was noticed during the weekly reconciliations of the branch.
The external source occurs between the customer and his associates outside the bank e.g. a staff of the company forging the signature of his/ her managing director and using it to withdraw money from the bank.
iv. Loans fraud
This takes place when credits is extended to non-borrowing customers (under-age) or to a borrowing customer who has exceeded his/her credit limit with a full understanding that the loan will not be repaid. This is very common in the Nigeria banking system.
v. Suppression of cash lodgment:
In this case, bank staff, for personal use sometimes diverts customers’ deposits, especially initial deposits for new accounts opening. The initial deposits for new accounts to be opened, supposed to be paid into a sundry accounts but some accounts officers do not pay this deposits into the sundry accounts and when the accounts are finally opened, the initialdeposits will not reflect and some customers do not know and they do not boarder to ask.
vi. Account opening
This could be perpetrated using any of accounts current, saving or deposit. Since this is the first thing that is done before an accounts can be transacted upon it has been discovered that some of or all of the particulars used in opening some accounts were fake or fictitious after the conduct of status inquiring, regular search findings or after investigation of frauds committed.
vii. Fraud transfer
This is a service of moving money from one account or bank for a customer usually on the instruction of the customer. Some common means of fund transfer are mail transfer, telephone over the customer, telex etc. Fraudulent money transfer may result from request created solely for the purpose of committing a fraud by the alteration of a genuine request could be altered by changing the beneficiary’s name or account number or changing the account to be transferred.
viii. Cashiering fraud
This occurs when a cashier (Teller) deliberately absconds with the money collected from the strong room vault.
ix. Computer fraud:
This type of fraud takes the form of corruption of the programme or application packages and even breaking into the system through remote sensors. Diskettes and flash drives can also be tempered with to gain access to unauthorized areas or even give credit to accounts for which the funds were not originally intended. This king of fraud can remain undetected for a long time.
x. Clearing fraud:
most clearing frauds hinge on suppression of an instrument so that at the expiration of the clearing period application to the instrument, the collecting bank will give value as though the paying bank has confirmed the instrument good for payment. Clearing cheques can also be substituted to enable the fraudster divert the fund to a wrong beneficiary. Misrouting of clearing cheques can also assist fraudsters to complete a clearing fraud. Asukwo, (1991) states that a local clearing item can be routed to an up country branch, the delay entailed will give the collecting bank the impression that the paying bank had paid the instrument.

There are different ways in which fraud can take place in the banking industry. The word fraud vary widely in nature, character and method of perpetration, thus making the classification a very difficult exercise some authorities (such as committee of chief inspectors of Banks (1987) and Sydney, (1986) prefer to group fraud according to the perpetrators, others prefer a classification based on the method used, (Adewunmi, 1986), Adekany, (1986) and the Banker Administration institute – Illinois (1992).
On the basis of perpetrators, bank frauds may be grouped into four broad categories:
a. Internal Fraud: Is carried out for committed by members of staff that is by insiders (or own employees) and might be in form of pilferage or embezzlement.
b. External Fraud: Committed by those not connected with the banks solely by outsiders in form of robbery and burglary.
c. Mixed Fraud: Committed by outsiders in collusion with bank staff.
d. Industrial Espionage: Is the act of spying by a competitor to learn the secrets of the organization.
Slightly different and more detailed classification of fraud is provided by Oyegbede. He classified.
 Errors produce unreliable records and include omissions of proper errors in posting.
 Irregularities are fraud intentionally perpetrated and may take any of the following forms, deliberate omission of entry, introduction of improper entry, improper calculation, improper posting, manipulation of documents, constitution of fictions documents and alteration of genuine document.

Oyigbede further subdivided irregularities into distortions and defalcations. Distortions are deliberate impersonation of financial position of separating results without any immediate loss of assets (window dressing). Defalcation are fraud of irregularities that result in immediate loss of assets.
1. Interceptions: The misappropriation of assets before they are initially recorded.
2. Abstractions: The misappropriation of recorded assets and
3. Divisions: This is the misappropriation of recorded assets by discrediting the centres for recorded asserts or by improperly converting disbursement.
Using the methods of perpetration as a basis for classification, types of fraud could be identified as the following.
1. Computer Fraud: This is a fraudulent manipulation of the computer either at the data collection stage, the input processing stage or even the data dissemination stage is another type of fraud sometimes referred to as computer virus. Computer fraud would also be due to improper input, system penetration, program manipulations, transactions manipulations, hijacks etc.
2. Clearing Fraud: The interception of clearing cheques which is usually practiced at the paying branch is another type of fraud. In this case, the cheque in question will be removed from the batch. This type of fraud can thrive where there is weak internal control and check and balance.
3. Tolex Fraud: Interception and switching of telex massage for transfer of funds is another type of fraud whose modus operandi is similar to interception of clearing cheques.
4. Cashiering Fraud: This is where there is false declaration of cash shortages especially by cashiers and note counters. Experience has shown that such fraudulently included staffers usually start with small shortages which later graduate to large amounts if severe sanctions are not meted out to them for any shortage declared to serve as a deterrent. Also, “the claim of supernatural influence” is another type of cashiering fraud. It is a case where cashiers release cash to their accomplices and later claim that they were under the influence of some evil forces. Most of such cashiers usually abscond from their duty post immediately the fraud has been perpetrated and may sometimes leave a note behind in their cage cubicles.
5. Defalcation: Defalcation of customer’s deposits either by conversion or fraudulent alteration of deposit vouches by either the bank. Cashier/customer’s agent is another form of fraud. Where the bank cashier and customers representative collide to defalcate. Such frauds are usually neatly perpetrated and takes longer time to uncover. They are in most cases discovered by customers during reconciliation of their bank statement.
6. Double Pledging: This type of fraud involve using false or non-existence collateral to obtain bank facilities the same scrutiny may be falsified and pledged in support of several facilities with the same bank or with different banks.
7. False Payments: This is the type of fraud that involves cashier introducing a spurious cheque into his cage with or without the collaboration of other members of staff or non-customer and subsequently pay out cash. This type of fraud is easy to detect at the one of the days work were through examination of vouchers and daily reconciliation of accounts are in place.
8. False Proceeds of Collection: False and spurious proceeds of collection in form of inter-bank instruments like mail transfers and drafts which are usually mysteriously introduced into the banking system.
9. Falsification of Status Report: Or doctoring go status report is aimed at giving undeserved recommendation and opinion to an unworthy customer.
10. Fraudulent Use of Bank Documents: Fraudulent use of valid bank documents such as bank statement sheet belonging to a different customer, bank letter head papers, bank rubber stamps, banks seal etc. are all acts of frauds.
11. Fictitious Accounts: This type of fraud is in respect of opening and separation of fictions accounts by branch staffers. Usually, such accounts are opening with fraudulent motive. They would be used to perpetrate frauds such as diversion of foreign unauthorized lending
12. Fictitious Contracts: the award of factious contract or phony contracts is a type of fraud, which is associated with fraudulent and dishonest management.
13. Forgeries: This could be forgeries of customer’s signatures to draw money fraudulently from customer’s account or forgeries of other employees signatures for fraudulent transfer of funds from one account to another or fraudulent withdrawal of funds from a customer’s account.
14. Impersonation: Impersonation by third parties to fraudulently obtain new cheque books which are consequently obtain new cheque books which are consequently utilized to commit fraud is another dimension of bank fraud. However, cases of impersonation may not succeed if the passport photograph of bonafide account holder is in place and referred to during the fraudulent transactions since the signature of the customer may be perfectly forged.
15. Inflation of Statistical Data: The inflation of statistical data of account performance to give deceptive impression of the account for whatever reason is a fraudulent behavior.
16. Duplication of Cheque Books, Drafts, mail Transfer: Bankers payment and other inter-bank instrument is another type of fraud. This type of fraud may be difficult to detect when the spurious document and the forged signatures there on bear close semblance to the original document/signatures.
17. Laundering: By con Men/Women has assured alarming discussion in recent times.
18. Misuse of Suspense Account: The use of suspense account returned cheques, I.O, U.S, customer’s saving/current accounts debts e.t.c are all fraudulent activities.
19. Robberies: Suppression of cash lodgment, cheques (especially clearing cheques) and other document of values such as direct debts standing orders e.t.c is another common type of fraud. It is usual among fraudulent staff to suppress third parties cheques drawn on their account when they have no sufficient funds to accommodate such drawings. Another type of suppression is that of customer’s surplus deposit which the receiving cashier or note counters will deliberately refuse to declare.
20. Manipulation of Vouchers: This could be used to perpetrate fraud either by substitution or conversion of entries of one account to another being used to commit the fraud. Manipulation of vouchers can thrive in a system riddled with inadequate checks and balances such as poor job segregation, lack of detailed daily examination of vouches/call over e.t.c.
21. Theft and Embezzlement: This could be in form of monetary items such as cash, travelers cheques and foreign monies or in form of other bank assets such as refrigerators, electrical equipments, air conditions, motor vehicles parts, computer equipments beverages, toiletries, stationeries e.t.c.
22. Over Invoicing: Over invoicing of purchases as well as banks recommended clinics and hospitals are all fraudulent activities. These types of malpractices are usually common in a bank where there is gross indiscipline and poor control over operation expenses.
23. Teaming and lending: This is similar to defalcation fraud. It involves the fraudulent manipulation of customer’s tellers of pay-in-slips at various time and consequently misappropriating the funds by the cashier or reference clerk when the customer comes to withdraw money from his/her account.
24. Over Valuation/Under Valuation of properties: Over valuation or under valuation of properties taken as securities and/or under valuation of properties being offered for sale are all fraudulent assets. These frauds which are usually committed by Advance or Security Officers may be difficult to establish hence there is need for an independent estate valuer in case of doubt.
25. Machine Fraud: This is where people use their machine cards and cocks, especially master cards to commit fraud. For an example, the use of Automated Telex Machine “A.T.M” card which people use presently to operate one’ account either by the use of the master card or by stealing the persons card when known the secret code. This is mostly the most recent type of fraud that exist in the banking industry.
The above list of types of fraud is not exhaustive since the methods used in perpetrating fraud seem to be increasing with time. The notoriety and ingenuity of fraudsters in devising new methods of defrauding banks have imposed a sense of fatalism on some bankers, who now lament that the problem of fraud is in surmount table.
While we appreciate the magnitude of the problem, we feel nonetheless that a comprehensive lest of all types and methods of committing fraud will help to anticipate and prevent it. Ultimately, this could be one of the ways of minimizing the incidence and effects of fraud sine prevention is better than cure.

In literature, the causes of fraud are grouped into two major classes. Institutional factor and environmental/societal factors. The institutional factors are those practicable to the internal environment of the bank, while the environmental/societal factors are those which result from the influence of the environment/society on the banking industry.
The common institutional causes of fraud as identified by different authors are summoned as follows;
 Volume of work
 Number of staff
 Nature of Services
 Banking experience of staffs
 Inadequate/lack of safe training
 Staff negligence
 Recruitment system
 Poor security arrangement for documents
 Use of sophisticated or writing machines
 Frustration
 Inadequate infrastructure
 Delays in procuring document
 Lapses in the management controls system of corporate
 Customers
 Negligence of customers
 Draft and Bankers payment
 Delay in prosecuting fraudsters
 Alteration/swapping of bank tellers
The environmental (societal factors have been identified as follows:)
 Societal values
 Inability of law enforcement agents to detect fraud and present fraudsters with dispatch
 Lack of effective deterrent punishment.

The immediate causes of frauds in general includes the followings:
1. Greed: A drive to acquire gains far beyond one’s income and immediate or long-term needs. This is what Archibong, (1992:108) describes as “get-rich quick Syndrome”. An extravagant life-style and greed are dangerous.
2. Genetic Curse: This has to be with heredity, a situation whereby characteristics are passed on from parents to offsprings’. “A case on point is a kleptomaniac who has pathological desire to steal for the sake of stealing” (FITG, p. 16).
3. Poverty: there is a common saying that “necessity is the mother of invention’. People get entangled in forgery, record falsification, gemming and leading, cash theft, over-invoilencing, computer manipulation or armed robberies as the result of poverty through poor income.
Other causes of frauds may be described as remote these include:
1. Poor internal Control system: This has to do with ineffective supervision, absence of manual operation, wear-operational and indiscipline among workers.
2. Lack of proper training: When a state is assigned a responsibility without adequate training or experiences, errors are inevitable and fraud can be perpetrated through such errors.
3. Poor Bookkeeping: Inability to keep proper books of accounts or reconcile clearing, inter-branch, suspense and Central Bank Accounts may provide a febrile ground for fraudulent manipulations.
4. Absence of Defined Job Schedule: Clearing officers who become a jack of all trade in their branches lack the grip of the clearing jobs through they pretend to be very busy always.
5. Inadequate staffing: A poorly staffed branch may have a serous problem of work planning and assignment. A branch provided with unqualified and inexperienced staff will be faced with the problem of training and supervising the bulk of its officers.
6. Protracted Absence of Suspension from Clearing House: Fraudsters in recent times do manipulate the instruments from banks which had been removed from the clearing house to heir won advantage. Such banks have their instruments cleared through other banks or agents without giving adequate information to all operators in the industry. This absence from clearing house may lead to undue execution of the clearing instrument, hence the development constitutes a breeding ground for frauds.
7. Clearing Agency for Community and Distressed: A Bank that serves as a correspondent bank to community and distressed bank for clearing purposes may run into the hand of fraudsters if such operations lack adequate dxymentations and control. These banks are not bound by the clearing rules and regulation as they are not members of the clearing house and any bank accepting clearing agency on their barely consequently accepts a big risk.
8. Non-Rotation of Clearing Duties: A staff perpetually added with a particular duty or schedule of duties of may develop undue familiarity with people who entice him to carry out a planned fraud. A perpetual clearing officer can become a syndicate for a large scale inters-bank fraud.
9. Socio-Political Factors: when the society is corrupt, wealth is glorified irrespective of its source. The desire to rain the political and ruling class coupled with the societal misplacement of values may compel a banker to throw professional ethics to the winds for fraudulent practices.
10. Economic Factors: A bank worker crowded with high cost of living and inflationary resort to fraudulent practices in order to make both ends meet.
11. Poor Clearing Facilities: Location of a branch in a remote area, may kilometers away from the clearing centre and expose the clearing officers and instrument. Absence of a good caring box and weak control over the clearing box keys and combinations may pave way for fraudulent.
12. Ineffectiveness of law enforcement Agencies: The unwillingness and inability of the police to investigate fraud cases or prosecute the offenders help to encourage fraudulent practices.
The above causes of frauds is not exhaustive and can be summarized as follows:
1. Low lust moral, employee’s frustration and general lust for affluence.
2. Poor control of security documents
3. The down-turn in the economy and political instability financial institutions to observe the laid down procedures.
4. Poor recruitment policy, poor staffing of vital functionaries and poor personnel practices
5. Re-engagement of dismissed or terminated fraudsters from other institutions, knowingly or unknowingly.
6. Absence of tough, unambiguous corporate policy community top management officers to pursue the severest sanctions including persecutions to acts of dishonesty.

Human desire to get or keep wealth, the insatiable appetite to amass wealth and the desire to get rich quickly are the reasons for fraud in developing as well as developed societies (Nwaamlwp, 1991:165).
According to Adewunmi (1986), causes of fraud can be categorized into two that is institutional factor and environmental/societal factors. He further categorized societal/environmental factors into socio-economic lapses/inadequacies that relate the internal environment of the bank. They are to be great extend factors within the control of the management of the bank. They include the following:
a. Poor Management: This comes in form of inadequate supervision. A junior staff with fraudulent tendencies that is not adequately supervised would get the impression that the environment is safe for the perpetration of fraud. Poor management would also manifest in ineffective policies and procedures which a fraudulent minded operator in the system will capitalize on even where there are effective policies and procedures in place, fraud could still occur with sometimes deliberate skipping of these tested policies and procedures.
b. Inexperienced operators: They are susceptible to committing unintentional fraud by falling for numerous tricks of fraudsters. An inexperienced operator is unlikely to notice any fraud attempts and take necessary precaution measures to checkmate the fraudsters or set the detection process in motion.
c. Poor salaries and poor conditions of services: This can also lead to fraud-employees that are poorly paid are often tempted to fraudulent convert some of the employers monies to their own use in order to meet their personal and social needs. This temptations is even stronger on bank employees who on daily basis have to deal with cash and near cash instruments.
d. Frustration: This could also lead to fraud where a staff feeds short changed in terms of promotion and other financial regards, they become frustrated and such frustration could lead to fraud as such employee would attempt to compensate himself in his own way.
e. Poor control system: Where important controls one overlooked, fraud could be easily perpetrated. This includes use of the protectgraph, test keys, token numbers etc. by unauthorized persons. Also easy access to cheques, drafts specimen signature cards can be easily exploited and induce a criminal minded individual into committing.
f. Exchange of passwords: This causes fraud when a staff exposes his/her password which supposes to be a secret number to him alone, to another staff may used it and do some of his job function i.e. he delegated his job function to another staff, the staff may after the delegated function, use the password and sign-on for other purposes.
g. Overstretching: This can aid perpetration of fraud to a large extent. A staff that is over-stretched is not likely to perform at optimum level of efficiency. Ordinarily, the longer a man stays on the job, the more proficient he is likely to be. An operator who has spent so long on a particular job else can uncover his fraud. The existence of this kind of situation in a bank is clear evidence of poor management and such situations encourage fraudulent practices.
g. Number of staff: In a unit or department where only one officer supervises subordinates, fraud is likely to pass undetected since effective management coordination will be lacking.
i. Recruitment system: Where people are recruited to represent special groups and none representing the interest of the bank, it becomes a problem. This is because they have not been recruited based on the startling qualities of a banker such as credibility, hard work and honesty. It implies that the recruited staff do not merit the job. Fraud may, also occur on recruitment of staff with high degree of criminal records.
j. Suspense accounts: Various suspense account exist in banks. Authorized of entries into and out of the account must be strictly monitored. Long outstanding items should be continuously traced until they reversed.
k. Lack of staff training: Inadequate or lack of training is detrimental. Staff must therefore be trained on their various assigned duties to enable them appreciated their responsibilities in detecting and preventing frauds. The results of lack of trained staff is that even some clever long serving messengers can easily take advantage of inexperienced and half-baked officer to perpetrated fraud in banks.
l. Greed: In our society today, it is believed that greed lures most people into fraudulent acts. This explains why fraud would still exist in the banking sector. Which is reputed to be one of the highest paying sector. Some people have an insatiable appetite to accumulate wealth and would therefore steal irrespective of how good their earning are.

The environment within which the bank operates brings about these factors and they includes:
a. Economic down turn: With the deteriorating economic situations, where employment opportunities are no longer no merit, the streets are filled with the unemployed, including fraudsters who have no “god-fathers” to fix them up in the labour market. With the excalating cost of living they get themselves into “419” business. More often than not, the outbreak of government institutions are sources of millions of naira bank fraud.
b. The general belief that banks can sustain any amount of loss: Most people have the belief that the banking sector is the most profitable industry. They belief that if theft make a lot of profit annually they can withstand any amount of loss hence the banks become the target for fraudsters.
c. Recognition accorded the rich: Not all the wealthy people get their wealth through hard work and honesty and because our society does not bother to investigate people’s source of wealth, fraud becomes a thing of dignity. Men and women, young and old engage in this act because the society does not only condone it but encourages them by making them chief launchers at various important occasions and singing songs of praise in the honour. Traditional chieftaincy titles and membership of board of directors of government owned companies are only for the influential individuals in the society “who have it”. Most of these title holders and board members have enriched themselves fraudulently but now enjoy public respect and accolade. So fraud becomes a way of life.
d. Delay in prosecution of offenders: The chances of fraudsters getting away with their loot are very high owing to inefficient police investigation and unsuccessful prosecution. It is on record that a lot of bank frauds reported to the police always ends up at the investigation stages. Follow up inquires hardly yields positive results. Few cases that finally get to the courts are also subjected to protracted litigation and all these delay can prompt bank staff to execute fraud.
e. Negative publicity: Where fraud cases are condoned and not reported for fear of negative publicity of the bank, it encourages fraudulent act since these fraudsters are sure that they will not be exposed
f. Rising Societal expection from Bank staff: This contributes to internal fraud because of the subsequent desire by the staff to live up to such expectation. Bank workers like other workers are member of society which pride and place is given to all kinds of corrupt practices and anyone who does not accept perseverance as a credo may throw up his hands in surrender and curse his luck for not “making it”. If the temptation is strong and the faith is weak, he/she may opt for the easier option for fast result, which may take the form of fraud.

Attempts have been made to weave the aforementioned factors into comprehensive factors into viour. Theories of fraud are terse and controversial.
Babatunde (1992) has propounded that the motivation to fraudulent behavior derives from a number of causes. These could be pathological, greed, the desire to be with the Jones; extreme want often characterized as dire need, cultural demands or the cultivation of tastes too expensive for the legitimate income of the individual. Criminal motivation, with particular reference to fraud is said to be pathological when the state of mind of criminal disposes the and impels him to commit fraud, even though he is not in dire need of the resource. A case in point is a kleptomaniae who has a pathological desire to steal for the sake of stealing. Greed as a motivation concerns the drive to be fraudulent, to acquire gains for beyond one’s income and immediate or long-term needs.
Adewunmi in his explanation of fraud identified socio-economic lapses in society such as misplacement of societal values, the unquestioning attitude of society towards the source of wealth, the rising societal expectations from bank staff and the subsequent desire of the staff to live up to such expectations as contributory factors to fraud.
Another theory of fraud states that banks have become persistent targets of men of the underworld mainly because banks are seen as the richest organization in any country. The exponent goes further to enumerate some of the other causes of fraud as insatiable instinct for wealth, over-concentration of authority, poor security arrangements for sensitive documents, industrial inertial and so on.
Oyigbede (1985) like Adewunmi opined that the main causes of fraud in banks in Nigeria is traceable is corruption in all facers of the society. Since there cannot be exceptions. He also mentioned other factors such as lack of call-over system, lack of regular and unnotified rotation of job which are incompatible and so on. While there is conscious on the causes of fraud in banks among authors the degree to which they apply to each bank differs from one organization to another.

Studies on bank fraud are normally prompted by the perceived effects of fraud on banks, and the desire to find the means of curbing such adverse effects. Attempts have therefore been made by many authors to identify the effects of frauds on banks.
The effect of fraud or the existence of any organization has long been recognized as devastating such organization of the negative effects on the nation has brought abrupt the creation of the law enforcing agents to combat the menace of this crime on honest and faithful citizen of the society.
As Nwankwo (1991) puts, it is the biggest single causes of bank failure. The effects of these frauds and other malpractices in bank cannot be overemphasized. It effect are enormous on not only banking activities but on the public economy as a whole. Apart from being a cause of bank failure, it also undermines the integrity of the banking industry making investors and customers loose confidence in the ability of the bank to carryout its function. It could also lead to closure of the bank or its activities being dissolved.
According to Paul, Uduky (1992) at the individual banks, level the following can be listed as possible effect implications of all confidence undermining activities, including large scale fraud. Adverse publicity erosion of public confident; flight to quality; losses; jerking up of cost of banking transactions. Run on the bank fraud can be contagious; lead to over-regulation collapse of the bank undermine the whole industry and the entire economy; he adds expropriation of someone else property, but also fatal threat to the integrity of financial market and therefore to their credibility to the world at large as unsafe and sensible place in which to trisect business, ones that credibility is lost. The market place in itself suspect shunned by hones men and likely to suffer over time a fatal loss of business.
Akanle (1991) states that malpractices in the banking industry often three segments of the society and these are the banks themselves including their shareholders, the depositors and other customers and users of bank services and the economy as a whole.
1. The banks and their shareholders financial malpractices in the banking sector often result in huge losses to the banks: This could happen through any one of the means already identified. This loss often result and reduced profits and dividend payment to prospectus investors.
2. The depositors and other customers/users of Banks Services: Persistent and extensive fraud on banks leads to bank failure. Apart from loss to the promotes/owners or any bank that goes into liquidation such is bound to adversely affect the depositors who may have to loose part or all of their savings of deposit with the bank. Fraudulent practices by officials in collusion with third parties can lead to substantial looses on the part of the bank customers business.
3. The impact on the Economy: The first immediate impact of the economy of prevalent malpractices in the banking sector is loss of confidence, is virtually all mode effecting payments for goods and services the possible exception being cash. Even where huge sums are involve, people are often reluctant to received payments in higher currency denominations. People would have lost faith in the cheques the mode of transacting business. Whereas in some system a cheque is regarded as good as cash.
However, Lescrote propounded five indicators which are applicable to fraud in the banking environment.
i. The perception that community leaders are indifferent to one’s needs.
ii. The perception that little can be accomplished in a society seen as basically impracticable and lacking order.
iii. The perception that life’s goals are receding rather than being realized.
iv. A sense of futility and
v. The conviction that one cannot count on personal associates for social, economic and psychological support.
A perpetrator may feel that management is indifferent to his needs, that in a situation of selection by means other than merit (e.g federal character, sons of the society his prospects are dim and his life ambition are not going to be realized, then a short cut has to be taken in desperation. It is implied that when the rules of the game of promotion, and better prospects of services improve the quality of life, instances of fraud in banking system will be reduced).
As a consequences, the activities of fraudsters have negative and grave effect on the affected bank. Some of the effect of fraud on banks according to the provision of the NDIC published report (1996).
Loss of confidence in the Bank:
Fraud is perhaps the most fatal of all the risk confronting banks. The enormity of bank frauds in Nigeria can be inferred from its value, volume and actual loss. A good number of banks’ fraud never get reported to the appropriate authorities, rather they are suppressed partly because of the personalities involved or because of concern over the negative image effect that disclosure may cause if information is leaked to the banking public. The banks’ customers may lose confidence in the bank and this could cause a set back in the growth of the bank in particular.
Fraud leads to loss of money, which belong to either the bank or customers. Such as losses may be absorbed by the profits for the affected trading period and this consequently reduces the amount of profit, which would have been available for distribution to shareholders. Losses from fraud which are absorbed to equity capital of the bank impairs the bank’s financial health and constraints its ability to extend loans and advance for profitable operations. In extreme cases rampant and large incidents of fraud could lead to a bank’s inability to meet their recapitalization requirements.
The distressed syndrome:
Fraud can increase the operating cost of a bank because of the added cost of installing the necessary machinery for its prevention, detection and protection of assets. Moreover, devoting valuation time to safe guarding its asset from fraudulent men distract management. Overall, this unproductive diversion of resources always reduces outputs and low profits which in turn could retard the growth of the bank.
It also leads to a diminishing effect on the asset quality of banks. The problem is more dangerous when compounded by insider loan abuses. Indeed, the first generation of liquidated banks by NDIC was largely a consequences of fraud perpetrated through insider loan abuses. If this problem is not adequately handled, it could lead to distress and bank failures.

Economic Crisis:
On the part of the Nations’ economy, a very important and adverse effect of incessant fraud in banks on the economy is that it discourages foreign investment. This is because most of the foreign investment and international trade is carried out through banks if there is no truth in the banking industry such transactions can not be carried on. It also reduce the National Income (NI)
Effect on Bank Staff involvement:
Fraud in a large scale may lead to reduction in the pay package of the employee. Besides it leads to suspension of sack of the employee or employees in question. The morale of honest staff is also reduced by actions of dishonest staff.

Consequences of fraud
1. Loss of confidence by customers
2. Close down of business
3. Money gained through fraudulent practices by an individual increases the chances of retrenchment for others situation of scarcity cutting of some services.
4. Fraud may not involve violence but may lead to violence in attempts to cover up.
5. Fraud deprives government institutions from much needed resources which leads to aborted development.
6. Loss of money which belong to the banks or customers.
In addition, the distraction of management’s attention, increase in operating costs and the wastage of time and resources on fraud prevention are other effects of fraud.

The Distress Syndrome
Banks frauds tends to jeopardize the industrial growth as most banks had already gone under due to distress while some are still batting with distress syndrome. Bank failures in Nigerian has gulped more than N40 billion so far from innocent depositors. This represents the total deposits of the distress and potentially distressed banks in 1996 as prescribed by Nigeria Deposit insurance Corporation (NDIC).
Efforts to eliminate distress in the industry include:
1. Self-Sanitizing Exercise: this includes a rationalization and retrenchment of staff, dissolution of board of directors and election of new ones, recapitalization direct acquisition by and merger with other organizations etc.
2. Direct Offer of Banks For Sale: This is usually arranged by the Central bank of Nigeria.
3. Establishment of failed Banks Tribunals: The federal Government established tribunals in consonance with the failed banks (Recovery of Debts) and financial malpractices in Banks degree No. 18 of 1994. The tribunals are empowered to try bank directors managers, staff and customers who were involved in one form of fraud of the other. Such trials involve forceful recovery of stolen money and property as well as imprisonment of the culprits.
4. Bank Restructuring: Diverse measures are put in place to rehabilitate distressed licensed banks. In most cases, the regulatory authorities act as facilitators.
5. Liquidation: Most distressed banks which failed to meet the re-capitalization requirements were forced to wind up.

Loss of Bank Funds
Fraud had caused hardships on banks especially those whose liquidity state was already in doubt. As frauds cases in banks continue to rise, Banks losses in terms of money also rises as depicted in the table below:

Loss Attributed to Frauds In Nigerian Licensed Banks
Bank type Year No of fraud cases Amount involved (N.M) Actual/expected losses (M)
Commercial 1996 587 1,542.91 371.08
Banks 1995 127 1,000.28 226.38
Merchants 1996 19 57.77 4.16
Banks 1995 14 5.08 2.75
747 2,612.04 604.37
Source: NDIC 1995 Annual Report and Accounts

According to the NDIC publication about 1914 banks staff of various ranks were involved in frauds between 1994 and 1996 the obvious effect is possible termination of appointment dismissal and suspension which would certainly affect their homes adversely. A bank with a high labour turnover is generally suspected to have been infected by the distress virus and members of the public are always reluctant to do business with them.

In view of the gravity of the effects of fraud in banks management has employed various measures aimed at controlling fraud. However, fraud has continued in an upward trend despite these measures and this has called for their effectiveness into question. A number of authors (Musa, Sydney and Sanusi among others) have indentified some management control systems that have been devised by banks to prevent fraud.
Sydney (1986) defined management control system as “The whole system of controls financial and otherwise established by management in order to carry on the business of a company in an orderly manner, safe-guard its assets and secure as few as possible accuracy and reliability of the records”.
Internal management control systems, were classified into two major groups.
– Internal checks and
– Internal audit.
Internal checks are the operational controls which are built into the banking system to simplify the processing of entries in order to secure prompt services, to help in minimizing clerical errors and to act as insurance against collusion.
Internal audit or inspection involves the review of operations and records undertaken within a business be specifically assigned staff. The role of inspectorate department are to serve as a watchdog in public funds properties to ensure that there is no improper application of these funds to ensure that expenditure and revenue are duly authorized an accounted for, for periodical inspection of account books in order to ensure that transactions are properly recorded and books are regularly balanced to investigate malpractice like frauds, forgeries and theft of bank money or properly.
Sanusi, classified existing systems of control into two, those aimed at prevention and those aimed at detection. Measures aimed at fraud prevention include; Dual control, operational manual, graduated limits of authority, lending limits, reporting system, micro-filming, close circuit television, establishment of inspectorate units, time-clock devices, general personnel policies, referencing on presentation of documents, of values, segregation of duties, verification of signature, control of dormant accounts, retention of passport sized photographs, close watch on the life-style of staff and coding, decoding and testing of cable and telex massages.
Others are the observance of laid down procedures for opening and closing of accounts and the use of regiscope camera to photograph persons drawing large sums of money.
Measures aimed at fraud detection include checking of cashiers, call-over, periodical submission of statement of accounts, reconciliation and baking of account at branch, inter-branch and heads office levels, stock-taking of security items and cash in the vaults and inspection by bank inspectors.
In addition to management internal control measures, the author suggested means of controlling fraud in banks which are the statutory requirements of an external auditor and the examination of banks” books by the Central Bank of Nigeria as a regulatory authority.
Sanusi (1985) attributed the effectiveness of these to weakness in staff policy and control operational procedures, and the attitude of management. In contrast, some other authors have argued that the cause of fraud in banks is not that of lack of management control system, but of lack of moral weakness of man: mind owing to his acquisitive instincts.
It is clear from the literature that banks are making considerable efforts at reducing the wave of fraud in their system. That fraud has been on the upward trend inspite of control measures resizes the question of why these measures have not succeeded.
Although suggestions were offered on the cases of the ineffectiveness of these measures, by some authors, on the whole past studies had failed to asses empirically the effectiveness of fraud control.
None of the available studies contained any empirical analysis of the relationship between fraud cases and their causes. It is therefore not clear whether a bank could even have sufficient information to predict when and how fraud will occur.
These and other unanswered questions represent a gap in the literature on fraud in banks.
With the rate of development of the banking industry and the growing volumes of fraud life with the banking supervision department of the Central Bank of Nigeria (CBN) and the Nigeria Deposit Insurance Corporation (NDIC). It is proper and urgent that these unanswered questions about fraud in banks be resolved. It is the need to fill this gap that justifies this research on fraud in banks.
To facilitate the process of answering these questions, a survey was conducted. The details of the sampling frame and analysis of returns are presented in the succeeding chapter
In view of the gravity of fraud in banks, the management of various banks have employed different measures, such as establishment of internal control unit, fraud alerts, security has called the effectiveness of these measures into questions.
Though details may differ from one bank to another, it all depends on size, location and general environment nationally and internationally. (Nwankwo 1991) was of the opinion that general procedures for the control should normally involve identification and detection, then lastly management.

Every bank is to be aware of an identify the types of frauds prevalent in the society, including the international society, the causes and modalities of the frauds and the potentials and prospects of some of them occurring in the bank. This will be a function of volume, types and concentration of the banks operations and the management of control system.
There are the internal and external management controls. Internal management controls are carried out on the inside of the company while controls are carried out on the outside. Internal management control is classified into two major groups: Internal Checks and Internal Audits. Internal checks are the operational controls, which are built into the banking system to simplify the processing of entries in order to secure prompt services, to help in minizing clerical errors and to act as insurance against collusion.
Internal audit on the other hand involves the review of operations and records undertaken withing a business by specifically assigned staff, which is usually the internal Auditor. There are people called external auditors too who examine the books of the bank to determine its truth and fairness. This kind of audit is mostly statutory in nature, which is called for by the law (Onkagba 1993).

The process of identification of fraud will enable the bank to access its susceptibility and identify which types it has to address particularly. Having done so, the next stage would be to evolve measures to prevent the occurrence of such frauds. The existing control systems can be classified into two, those aimed at prevention and those aimed at detection. Measures aimed at fraud prevention include dual control, operation manual graduated limits of authority, lending units, reporting system, close circuit television, establishment of inspectorate units, referencing on presentation of document of value, segregation of duties, verification of signatures, controls of dormant accounts, detection of passport sized photos, close watch on the lifestyle of staff and coding/decoding and testing of telex message. Measures aimed at fraud detection include checking of cashiers, call-over, reconciliation and balancing of accounts at branches, interbank at head office levels, periodical submission of statement of accounts, stock taking of security items and cash in the vaults and inspection by bank inspectors.
The CBN as the supervisor and regular of the banking systems is interested in ensuring that banks put in place comprehensive and effective internal control systems to minimize the incidence of frauds and whenever they occur to ensure that they are detected from the point of view of supervisors, a good internal control system must have the following attributes: dual control, segregation and rotation of duties, an effective and independent inspection functions, clearly defined levels of authority and responsibility existence of an efficient Audit Committee and adequate fidelity insurance cover.
It is also the responsibility of the supervisor to determine bank’s compliance with rules and regulations through exhaustive review of their internal audit reports. They ensure that appropriate steps are taken by the board and management of banks to address issues raised in the audit report. It is also their duty to ensure that fraudulent bank directors and staff are sanctioned with such report being duly circulated among banks and also that banks take advantage of Risk Management System (Credit bureau) to monitor fraudulent customers and accomplices (CBN, 2000). The supervisors are also to cooperate with the external auditor of banks to ensure that the internal audit programme of banks is comprehensive, adequate and effectively executed – The supervisors should also conduct an in-depth investigation into activities of a bank when put on enquire. In order to enhance the ability of supervisors to carry out their responsibility effectively, they must be adequately trained and equipped with modern tools for supervision.

The CBN/NDIC Role in Fighting Bank Fraud
The subject of frauds in the financial system is of special concern to the monetary and supervisory authorities, particularly the CBN and NDIC. These government agencies are empowered to regulate and supervise banks.
They do so by creating an effective frame work including:
1. Setting criteria for entry
2. Setting level of capital adequacy
3. Ensuring assets classification and provisioning
4. Preventing loans to insiders and connected parties
5. Ensuring assets diversification
6. Determining scope, frequency, and content of the audit programme
7. Enforcing compliance to rules and regulations by imposing fines and penalties for criminal acts and violation of specific rules
8. On-site and off-site supervision.
Moreover, these agencies are concerned abut the safety of individual institution and the soundness of the banking system. Accordingly, section 39 and 40 of the NDIC decree No. 22 of 1998, place on the insured banks in Nigeria, the responsibility of rendering to the corporation, monthly returns on fraud, forgeries or outright theft occurring during such months and notifying the corporation of any staff dismissed, terminated or advised to retire on grounds of frauds. This no doubt is aimed at preventing and controlling frauds in banks.
There prudential regulation of the CBN/NDIC to banks are also aimed at controlling frauds. For example, the condition in the prudential guidelines for licensed banks that all banks should review their credit portfolio quarterly would help early detection of any acts of fraud, forgeries relating to loans and advances granted under suspicious circumstances.
CBN and NDIC examiners supervise banks not only to ensure that they are operating according to the rules and regulation of the industry and that they are healthy, but also to control and detect frauds.
Chartered Institute Of Bankers Of Nigeria (CIBN)
It is the umbrella organization of practicing banks, and has joined in the war against frauds in the banking sector. The institute has set of frauds and infamous conduct involving their members. Even though there are government agencies responsible for fraud investigation and activities generally, (Economic sabotage tribunal), the police and law court, and chartered institute of Bankers of Nigeria (CIBN) panel becomes more relevant because, even if such tribunals or law courts did not find an accused bank staff guilty even a case, it does not means that such staff will no be professionally quality if he is investigated by the panel.
The institutes have the legal right to discipline carrying members following the recent charter it received from government. The Chartered Institute of Bankers of Nigeria (CIBN) panel in effort instills professional discipline on members. It is able to investigate fraud cases in banks more thoroughly than the police because the panes members are more well verse on the practical aspect of banking. In addition to setting up the panel the CIBN annual prebudget memorandum to the federal government in which amongst its impact is included recommendation relating to fraud control in the banking sector. Such inputs are occasionally reflected in government financial guidelines, which are used by CBN to control operations in the banking sub-sectors. The institute organized symposia and seminars to high-light modern ways of preventing frauds in banks and undertakes general pertinent public enlightenment

The origin of fraud is as old as the banking business itself. This is because prior to 1892, when banking started in Nigeria, various mushroom banks were established and these banks collected large amounts of money from depositors after which such banks folded up and were never re-opened thereby dividing a large part of the society (Adeniyi, 1988:1).
During this period, banking in its modern form had not been introduced. The banking system was characterized by the dearth of banking legislation and regulations or directives which resulted in banking becoming a free for all affir, leading to gross misconduct and abuses (Agene, 1995:57).
The free banking era came to an end where the banking ordinance of 1952 was promulgated thus ushering in the era of Banking legislation in Nigeria.
The incidence of Advance Fee Fraud commonly known as “419” began to pose a serious threat to the security as well as economic prosperity of Nigeria in the later past of the 1908’s probably with the introduction of the IMF/World Bank package of structural Adjustment Programme (SAP). SAP intensify the devaluation of the Naira which made foreign exchange scarce with a consequence of increased hardship on the economy and the citizenry. This by extension brought increased criminal activities by a few greedy Nigerians who wanted to get rich as quickly as possible (Adewunmi, 1996; 10-11).

NZOTTA, S.M. (2004) “Money, Banking and Finance” Theory and practice. 2nd Edition.

ODUFU IMALA, I. (2005) “Challenges of Banking Sector Reforms and Bank consolidation in Nigeria” April/June.

Ajayi, E.A. (1980), African Development Bank, conference paper, Nigerian Institute of Bankers.

Adeyemi S. (2002), The challenges of universal, Banking Nigeria Banker Journal of CBN Jan-June 2000.

Nwankwo, G.O. (1982), The Nigerian Financial System London, Macmillan press.

Sanusi, J.O. (1985): Management Control System for the prevention and detection of fraud in banks. Adopted in frauds in banks. Wole, Adewunmi. Pages 37-38

Sydney, E.F. (1986): “Management Control System and the prevention and detection of fraud in banks” in Wole, Adewumi (1985) Frauds in Banks, Lagos

Nigerian Deposit Insurance Corporation (NDIC) (1992 Annual Report). 1992-2002.

Babatunde, E.D. (1989): “Precipitating Factors in Fraud and Criminal Motivation. A paper presented at the effective bank inspectors course organized by the FTTC. July, 8.

Musa, S.O. (1985): Management Control System for the prevention and detection of frauds in banks. Adopted in frauds in banks Wole, Adewunmi. Pages 9-17

Fegbemi, B. (1986): Frauds and the Law the Nigerian Bankers, Vol. 6 No 1page 13.

Clement, Nwakobi (1989): Frauds in Banks “prospects Business Times. June, 5th

Committee of chief Inspectors of Banks (1987): Reports on Frauds and Forgeries.

Ubani, G.I. (1986) “Bank Frauds. A sober reflection”, Business Times Nov. 17. Page 16.

Nwachukwu Celestine, C. (2004), Modern Nigerian Business law (students companion).

Prudential Regulation of Nigerian Banking, (1990), Logos, Universal of Lagos press.



According to Baridam (2001), this section is of vital importance in any research study. For it will provide a report primarily on the various techniques and strategies used for the collection of data, data analysis, testing or validating the hypothesis as to yield the anticipated result to which this study is carried out. However, it is of reasoning that respondents must be only the bank managers as previously mentioned from some selected universal banks within Port Harcourt.


The design for this study serves to describe the extent of frauds in the Nigerian Universal Banks: causes, effects and controls.
Exploratory cross-sectional survey was employed; exploratory cross-sectional field survey studies samples, the researcher can find remedies to minimize the incidence of fraud in universal banks by examining the inter relationship among the characteristics of the defined population. It is used in this study to help the research select from the populations of his/her interest.

The sampling procedure used in this research study was Simple Random Sampling Method. In selecting the banks, questionnaires were distributed to 15 (fifteen) Universal Bank Branches in Port Harcourt. These fifteen branches were chosen because they represent the accessible population target or population of interest and it is believed that they would yield data that could be reliable taken as proof for the general bank responses. This questionnaire were served only to hose considered relevant to this study. The names of these banks are shown as appendix.

The questionnaire method was chosen because it allows for more detailed information. It is versatile and is one of the cheapest method beside face to face interviews and other methods. It contains both multiple choice questions and open ended questions that are easily understandable and comprehensive enough. The questions were designed to provide answers to the research questions and to test the hypothesis.

The data’s used in this study were collected from both primary and secondary sources. Mainly primary which was from the feed back from respondents through the questionnaires. The administering of these questionnaires were restrictive. This is because only bank managers were considered to be knowledgeable enough to the subject matter of the study.
A total number of 41 questionnaires were distributed to 10 banks. These were given to banks officials in a position to provide answers relevant to our study. Face to face interviews were done where accessible and necessary.

The variables to this study are the various indicators capable of quantitative determination of bank frauds in Nigeria, causes, effects and control. The variables will be defined or measured operationally using “Ordianl scale” instrument.
The dependent variables which is “Bank fraud in Nigeria” will be represented by (x) while the independent variable which is the cause, effects and control will be represented by (y).

According to Baridam 2001, the purposes of statistical inference are to test statistical hypothesis and to estimate the population parameters.
However, for the purpose and success of this study, the data collected from various sources and the hypothesis will be analyzed using the statistical measurements known as:
– The Spearman Rank Order Correlation Coefficient

The Spearman Rank Order Correlation Coefficient:
The spearman rank order correlation coefficient is used in testing the stated hypothesis. This instrument is among the non-parametric statistical test that can be used for one, two, or more variables. The purpose of this test is to determine or measure the degree of relationship between two set of ranked observations. In other words, to indicate the degree of effectiveness in predicting one-ranked variable based on another ranked variable.
It has the following formula:

Where Σd2 = Sum of the squared differences in the ranking of the subject on the two variables
N = Number of Subject being ranked


Baridam, D.M. (2001): Research Method in Administrative Science. Third Edition. Sherbrook Associates, Port Harcourt.

Murry, Spiegal, R. (1992): Theory and problems of Statistics. Scheum’s Series. McGraw Hill book co.

Abdellah, F-G and Levine, E. (1979): Better Patient care through Nursing Research. New York; Macmillan Publishing Co.

The previous chapter dealt with the description of nature of data and research procedure in this study. This chapter will focus on presentation and analysis of the data collected.
However, as posited by Baridam (1990) immediately a researcher has collected all the data he needs for his research work, it is important to transform the data into a state that it can be easily be used. Actually, no set of data is meaningful until it is presented and interpreted by the researcher or user. The presentation and analysis of data can be presented in figures, tables, frequency or as written extracts (Baridam, 1990).

Questions 11, 12, and 13 was designed to answer this questions. With the advancement in modern technology, all the bank respondents said that their banks were computerized and that no doubt this has increase its efficiency and the level of their profitability. i.e most of the work load and burdens of manual operations had been erased, thereby making the work more efficient and increasing the level of there profitability. But on whether it has aided in bank frauds and it extent, 12 (29.30%) out of 41 respondents stated that computers has affected the incident of frauds in the banks to a great extent, 19 (24.3%) stated to a moderate extent, which 10 (24.4%) and 1 (2.4%) stated to a low extent and no effect respectively.

Question 7 was asked to provide answers as to whether the growing incidence of fraud has affected the banks performance level and the quality of service offered to its customers, 9 (22%) stated both a great and low extent, 11 n(26.8%) stated to a moderate extent and 12 (29.3&) said is had no effect at all on their activities or performance.

On whether the incidence of fraud has a negative effect on their customers patronage or not, question (10) was used to get their response. Only 1 (2.4%) stated that it has affected the flock of customers they had. 10 (24.4%), 12 (29.3%) and 16 (39%) stated to a moderate extent, to a low extent and has no effect all respectively.

As earlier stated in the questionnaire, questions were asked to help in testing and analyzing the hypothesis stated in testing and analyzing the hypothesis stated in chapter one. Questions 3, 4, and 6 were used to provide data for testing the first hypothesis. The data will be ranked and used in testing the relationship between bank frauds and universal bank profitability. This was measured at both an interval scale and ordinal scale respectively. Numerical values was assigned to question (3) which was measured on an interval scale to change to an ordinal scale e.g (1, 2, 3, 4) etc. The data collected is presented in the table 4.2.1 below:

TABLE 4.2.1
Respondents Banks fraud rank
BF RBF Consumer patronage
1 2 15 3 26.5 -11.5 132.25
2 4 33.5 2 17.5 16 256
3 2 15 3 26.5 -11.5 132.35
4 3 21.5 2 17.5 4 16
5 4 33.5 4 37 -3.5 12.25
6 4 33.5 3 26.5 7 49
7 4 33.5 3 26.5 7 49
8 3 21.5 3 26.5 -5 25
9 3 21.5 4 37 -15.5 240.25
10 4 33.5 3 26.5 7 49
11 0 5.5 0 2.5 3 9
12 1 11.5 1 9.6 2 4
13 0 5.5 0 2.5 3 9
14 0 5.5 0 2.5 3 9
15 0 5.5 0 2.5 3 9
16 0 5.5 1 9.5 -4 16
17 0 5.5 1 9.5 -4 16
18 0 5.5 1 9.5 -4 16
19 3 21.5 3 26.5 -5 25
20 4 33.5 1 9.5 24 576
21 3 21.5 4 37 -15.5 240.25
22 3 21.5 2 17.5 -4 16
23 4 33.5 3 26.5 7 49
24 4 33.5 4 37 -3.5 12.25
25 4 33.5 1 9.5 24 576
26 4 33.5 4 37 -3.5 12.25
27 2 33.5 1 9.4 5.5 30.25
28 4 15 2 17.5 16 256
29 1 33.5 2 17.5 -6 36
30 0 11.5 1 9.5 -4 16
31 0 5.5 1 9.5 -4 16
32 0 5.5 1 9.5 -4 16
33 4 33.5 4 37 -3.5 12.25
34 2 15 4 37 -2.5 489
35 4 33.5 4 37 -3.5 12.25
36 3 21.5 2 17.5 4 16
37 4 33.5 3 26.5 7 46
38 4 33.5 4 37 -3.5 12.25
39 3 21.5 3 26.5 -5 25
40 4 33.5 3 26.5 7 49
41 2 15 3 26.15 -11.5 132.25
0 3718

Source: Field survey
In the second hypothesis, we are combining the level of bank frauds and computerization of their services to assess the degree of their relationship as they affect banks performance level.
Questions 7 and 13 were used to provide the data for this. The data is also ranked and the performance level will be donated X and computerization as Y. the table is shown below in table 4.2.2.

Table 4.2.2
Data on performance level and computerization and frauds
Respondents X RX Y RY d d2
1 3 27 3 20 7 49
2 3 27 3 20 7 49
3 3 27 4 35.5 -8.5 72.25
4 3 27 4 35.5 -8.5 72.25
5 4 37 4 35.5 1-5 2.25
6 2 17 3 20 -3 9
7 2 17 3 20 -3 9
8 1 6.5 4 35.5 -29 841
9 4 37 3 20 17 289
10 2 17 2 6 11 121
11 1 6.5 2 6 0.5 0.25
12 1 6.5 2 6 0.5 0.25
13 1 6.5 2 6 0.5 0.25
14 3 27 4 35.5 -8.5 72.25
15 1 6.5 3 20 -13.5 182.25
16 1 6.5 1 1 5.5 30.25
17 1 6.5 4 35.5 -29 841
18 2 17 2 6 11 121
19 3 27 3 20 7 49
20 1 6.5 3 20 -13.5 182.25
21 2 17 3 20 -3 9
22 3 27 4 35.5 -8.5 72.25
23 2 17 3 20 -3 9
24 3 27 3 20 7 49
25 1 6.5 3 20 -13.5 182.25
26 4 37 3 20 17 289
27 2 33.5 3 20 7 49
28 2 17 4 35.5 -18.5 342.25
29 2 17 4 35.5 -18.5 342.25
30 1 6.5 3 20 -13.5 182.25
31 1 6.5 3 20 -13.5 182.25
32 1 6.5 3 20 -3.5 182.25
33 4 37 2 6 31 961
34 4 37 2 6 31 961
35 4 37 2 6 31 961
36 3 27 4 35.5 -8.5 72.25
37 4 37 2 6 31 961
38 4 37 2 6 31 961
39 4 37 2 20 17 289
40 3 27 3 20 17 49
41 4 37 4 35.5 1.5 2.25
-18.5 342.25
0 9481

Source: Field survey
Finally, questions 3, 5 and 10 were designed to provide data for tasting the last hypothesis. In this questions, the respondents were asked to state the extent of amount involved in the frauds and to what extent this has affected the level of their consumer patronage. The data is presented in the table 4.2.3 below.

Table 4.3.2
Data of bank frauds and consumer patronage
Respondents Banks fraud rank
BF RBF Consumer patronage
1 2 15 3 35.5 -20.5 420.25
2 4 33.5 2 24.5 9 81
3 2 15 3 35.5 -20.5 420.25
4 3 21.5 2 24.5 -3 9
5 4 33.5 4 41 -7.5 56.25
6 4 33.5 2 24.5 9 81
7 4 33.5 2 24.5 9 81
8 3 21.5 1 10.5 11 121
9 3 21.5 3 35.5 -14 196
10 4 33.5 2 24.5 9 81
11 0 5.5 1 10.5 -5 25
12 1 11.5 1 10.5 1 1
13 0 5.5 1 10.5 -5 25
14 0 5.5 0 1.5 4 16
15 0 5.5 0 1.5 4 16
16 0 5.5 1 10.5 -5 25
17 0 5.5 1 10.5 -5 25
18 0 5.5 1 10.5 -5 25
19 3 21.5 2 24.5 -3 9
20 4 33.5 1 10.5 23 520
21 3 21.5 3 35.5 -14 196
22 3 21.5 3 35.5 -14 196
23 4 33.5 2 24.5 9 81
24 4 33.5 3 35.5 -2 41
25 4 33.5 1 10.5 23 529
26 4 33.5 1 10.5 23 529
27 2 15 2 24.15 -9.5 90.25
28 4 33.5 1 10.5 1 1
29 1 11.5 1 10.5 -5 25
30 0 5.5 1 10.5 -5 25
31 0 5.5 1 10.5 -5 25
32 0 5.5 1 10.5 -5 25
33 4 33.5 3 35.5 -2 4
34 2 15 3 35.5 -20.5 420.25
35 4 33.5 3 35.5 -2 4
36 3 21.5 2 24.5 -3 9
37 4 33.5 2 24.5 9 81
38 4 33.5 1 10.5 23 529
39 3 21.5 2 24.5 -3 9
40 4 33.5 3 35.5 -2 4
41 2 15 2 24.5 -9.5 90.25
0 5623.5

Source: filed survey

In testing the hypothesis, all the hypothesis stated in chapter one were tested using the spearman
Rank order correlation coefficient which is given as
rs = 1 –

Ho1: there is no significant relationship between frauds and universal banks profitability.
Substituting from the data presented in table 4.2.1 in the equation, we have:
rs = 1 –
= 1 – 0.32386
= 0.676
Also, to test the null hypothesis,
Z = rs

Z = rs
= 0.676 = 4.275
The null hypothesis = 4.274

Accept H0 if calculated 2< critical Z, otherwise we reject at 0.05 level of significance. So far a two tail test with a =0.05, the critical 2=1.96. Therefore, since 4.275 (calculated Z) is greater than 1.96, we accept the alternative and reject the null hypothesis. Thus, there is a positive relationship between bank fraud and bank profitability.

Hypothesis II
H02: There is no significant relationship between the level of bank performance, computerization and the level of frauds in banks.
Substituting also from the data in table 4.2.2 in the question, we have,
rs = 1 – 6
= 1 – 56892
= 68880
= 1-0.82595
= 0.174
To test the null hypothesis
Z = 0.174
= 0.174
= 1.10
In this case, the calculated Z (1.10) is than 1.96 and so we accept the null hypothesis and reject the alternative hypothesis. The null hypothesis states that there is no significant relationship between the level of banks performance, computerization and the level of frauds in banks.

Hypothesis III
Ho3: There is no significant relationship between bank frauds and consumer patronage,
Substituting from the data presented in table 4.2.3, in the equation we have
rs = 1 – 6
= 1-33741
= 1-0.48985
= 0.510
To test the null hypothesis we have
Z = rs
= 0.510
= 0.510 x 6.3245
= 3.225
We reject the null hypothesis and accept the alternative i.e there is a positive relationship between fraud and consumer patronage.

As stated in the introduction, the three hypothesis in chapter one were totally tested in this chapter using a single method of analysis, the spearman rank order correlation coefficient. The result from the first and the third hypothesis tested showed that there is a significant relationship between banks frauds and banks profitability and also between bank fraud and consumer patronage respectively. But found out that in the second hypothesis, there was no significant relationship between the level of bank performance, computerization and the level of frauds in banks.

From the view of our previous chapters, it is obvious that this study have proffered various control measures in combating fraud in financial institutions. The degree of fraudulent practices in Universal Banking System has assumed a claiming proportion such that it becomes a problem, management of the institutions pursuit of strategies to minimize the incidence of fraud has instituted various preventive and control measures to no avail. It is the magnitude of this implication in the banking industry that has therefore inspired this research study on frauds in the Nigerian Universal banks. Which is posited as: bank frauds in Nigeria; causes, effect and control. In limiting the scope of study, only some selected banks within Port Harcourt were selected and used for the research findings.
In addressing the objectives of the study in this research work, three hypotheses were formulated and tested using the statistical tool known as Spearman rank order correlation coefficient (RS). The results obtained from the analysis of the hypothesis precisely “one” and “three” indicated that there was a significant relationship between bank frauds and bank profitability and also between fraud and consumer patronage. Which made us to accept our alternative hypothesis and rejected the null. It means that the more incident of fraud occurs in the institution, the more chances the banks stands not to maximize their profit level. Also the consumers and the general public losses confidence in the systems and services been offered by the banks as they wouldn’t want anything to happen to their sweat. Rather all they care for is the safety of their deposited money happen to their sweat. Rather all they care for is the safety of their deposited money and assets.
In the second hypothesis, we accepted our null hypothesis which states that, there is no significant relationship between the level of bank performance, computerization and the level of frauds in banks. This simply indicates that there is no negative effect on bank performance through computerization and frauds in bank. The banks have always try to satisfy their customers needs.
However, both primary and secondary data were employed for the purpose of meeting the objective of the study also. The primary data were collected through the questionnaires administered to only the selected respondents, while the secondary data were collected through the textbooks, journals, magazines e.t.c.

The incidence of fraud has been indentified as a negative phenomenon and a serious threat to the Nigeria banking industry.
However, banks have taken various measures to minimize his incidence of fraud. Also the causes, effect and various control measures have been indentified in this research work on how fraud can also be controlled and managed by our various banks. It has been noted that these negative acts of fraud in Nigeria banks are highly linked to high societal acquisitive instinct and lust for material wealth. Though permanent solutions to fraud appears not be at sight, but is believed that the effective and timely implementation of recommendations proffered at the end of this study will go a long way in minimizing fraudulent practices in the Nigerian banking industry and by linkage effect enhance the growth of the economy generally.
The researcher earlier on this research work while reviewing some past and present literature outlined some ways in which fraud could be minimized and if possible be eliminated entirely from the banking industry.
However, the researcher finally in this research work, made the following recommendations:
1. Banks should institute effective control and preventive measures to assist them in management of fraud. Thereby tightening their security measures on the internal systems.
2. Banks should carry out research on fraud regularly to keep track of the developments because causes and methods employed in fraud vary with time.
3. Banks should always ensure that all cases of fraud are reported to the Central Bank of Nigeria and full information provided on each case.
4. They should ensure that their contract agreement between them and their employees are properly worded and certain clauses inserted to protect the bank in case of fraud perpetuated by an employee.
5. Bank managers should be obtained and retrained regularly. Internal control measures directed at forestalling forged cheques and forged signatures should be streamlined to remove any opportunity be induced to commit this dishonest act of fraud.
6. Law enforcement agents should try as much as possible to detect fraud and prosecute fraudsters so that banks ban freely report any fraud case to them.
7. Also, I would recommend that the banks should always try and comply with the monetary policy circulars always been given to them by the Central Bank of Nigeria to enable them avoid some of this incident of fraud.
8. And finally they should have regular balancing of accounts

Nwachukwu, C.C. (2004): Modern Nigeria Business Law (Students companion).

Orji, H.O. (1989): Appraisal of the Nigerian Financial System. CBN Bullion Vol. 13 No.2 March/April.

Ahmed, A. (1991): “The Role of Banks in Achieving a sell Reliant Economy” CBN Bullion Uni. No. 1 January/March.

Roza, Lozusie (2003): Home Information Resources Research Paper Briefing paper.

Ovuakporie, V. (1994): Bank Fraud, Causes and prevention an empirical Technology types setter Ltd.

Baridam, D.M. (1995): “Research Method in Administrative Science”. Para graphics, Port Harcourt.

NZOTTA, S.M. (2004) “Money, Banking and Finance” Theory and practice. 2nd Edition.

ODUFU IMALA, I. (2005) “Challenges of Banking Sector Reforms and Bank consolidation in Nigeria” April/June.

Ajayi, E.A. (1980), African Development Bank, conference paper, Nigerian Institute of Bankers.

Adeyemi S. (2002), The challenges of universal, Banking Nigeria Banker Journal of CBN Jan-June 2000.

Nwankwo, G.O. (1982), The Nigerian Financial System London, Macmillan press.

Sanusi, J.O. (1985): Management Control System for the prevention and detection of fraud in banks. Adopted in frauds in banks. Wole, Adewunmi. Pages 37-38

Sydney, E.F. (1986): “Management Control System and the prevention and detection of fraud in banks” in Wole, Adewumi (1985) Frauds in Banks, Lagos

Nigerian Deposit Insurance Corporation (NDIC) (1992 Annual Report). 1992-2002.

Babatunde, E.D. (1989): “Precipitating Factors in Fraud and Criminal Motivation. A paper presented at the effective bank inspectors course organized by the FTTC. July, 8.

Musa, S.O. (1985): Management Control System for the prevention and detection of frauds in banks. Adopted in frauds in banks Wole, Adewunmi. Pages 9-17

Fegbemi, B. (1986): Frauds and the Law the Nigerian Bankers, Vol. 6 No 1page 13.

Clement, Nwakobi (1989): Frauds in Banks “prospects Business Times. June, 5th

Committee of chief Inspectors of Banks (1987): Reports on Frauds and Forgeries.

Ubani, G.I. (1986) “Bank Frauds. A sober reflection”, Business Times Nov. 17. Page 16.

Nwachukwu Celestine, C. (2004), Modern Nigerian Business law (students companion).

Prudential Regulation of Nigerian Banking, (1990), Logos, Universal of Lagos press.
Baridam, D.M. (2001): Research Method in Administrative Science. Third Edition. Sherbrook Associates, Port Harcourt.

Murry, Spiegal, R. (1992): Theory and problems of Statistics. Scheum’s Series. McGraw Hill book co.

Abdellah, F-G and Levine, E. (1979): Better Patient care through Nursing Research. New York; Macmillan Publishing Co.

Department of Finance & Banking,
Faculty of Management Sciences,
University of Port Harcourt
Port Harcourt,
Rivers State.
Dear Respondent,

This research work on bank fraud is being carried out to fulfill the requirement for the award of B.Sc in the field of Banking and Finance.
Kindly respond to all questions truthfully and to the best of your knowledge so as to facilitate this research for lasting solution to the problem of frauds in Nigeria banks.
Thanks for your co-operation

Yours Sinccerely,
Okeke Charity, N.

Please tick ( ) in the appropriate boxes

1. What is your sex?
Male Female

2. How long have you worked in the bank?
i. 1-5 years
ii. 5-10 years
iii. 10-15 years
iv. Over 15 years

3. At what level of agreement are you in your bank?
Top management level
Middle management level
Lower management level

4. Have there been any recent cases of bank fraud in your bank?
Yes No

5. To what extent has this been, amount involve (000)
50 above

6. To what extent has this affected the profitability of your bank?
a. To a great extent
b. To a moderate extent
c. To a low extent
d. No effect

7. To what extent has bank fraud affected the level of performance of your bank?
a. To a great extent
b. To a moderate extent
c. To a low extent
d. No effect

8. To what extent has bank fraud contributed to bank failure?
a. To a great extent
b. To a moderate extent
c. To a low extent
d. No effect

9. What are the most significant factor that makes people commit fraud in your own thinking?
i. Urge for quick wealth
ii. Personal dishonesty
iii. Hostility of the bosses
iv. Inadequate security

10. To what extent has frauds in the banking industries affected your customer patronage?
a. Great extent
b. Moderate extent
c. Considerable extent
d. Low extent

11. Is your bank computerized?
Yes No

12. How has computerization of your banking transaction affected your banks profitability?
Possible Negative

13. To what extent has computerization of banking transactions affected the incidence of bank fraud?
a. to a great extent
b. to a moderate extent
c. to a low extent
d. no effect

14. To what extent do bank staff involve themselves in fraudulent activities
a. Great extent
b. Moderate extent
c. Considerable extent
d. Low extent
15. Do you think fraud can be eliminated in the banking industry without the help of bankers? Yes No


1. United Bank Plc
2. Intercontinental Bank Plc
3. Eco Bank Plc
4. Fin Bank Plc
5. Union Bank Plc
6. First Bank Plc
7. Zenith Bank Plc
8. Bank PHD
9. Fidelity Trust Bank Plc
10. Microfinance Bank


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