Factors affecting Bank fraud In Nigeria

INTRODUCTION

In every country of the world, the banking sector plays a crucial role in increasing their economic activity. The failure of banks to fulfill the role which they play stems from the several risks which they are exposed to; some of these risks are not properly managed despite efforts put into them.

One of such risks which are becoming a cankerworm eating deep into the fabrics of the banking sector is fraud.  Esoghene (2010) has it that frauds are more pronounced and a serious issue in the Nigerian banking system. The level of fraud in Nigerian banks is fast rising at an alarming rate and is becoming a big embarrassment to the country.

An NDIC (2011) publication revealed that over 1,914 bank staff of various banks was found to be involved in bank frauds between 1994 and 1996. According to this report, Fraud contributes greatly to the failure of many banks in the 1990s. In 1998 alone, 32.1% of shareholders funds were involved.

Ogwuma (1981) pointed out that banks in Nigeria at an estimate were at a risk of losing one million naira or more on every working day due to frauds which comes in various forms. As at 2017, this estimate becomes low especially with several measures which have been put in place in order to curtail the incidence of fraud; one prominent measure that was taken to curb fraud in banks is the introduction of Bank Verification Number (BVN) in the year 2016.  The BVN is an eleven unique digit code given to a person and can be verified across every other bank in Nigeria. The BVN was implemented by the Central Bank of Nigeria to curb illegal transactions in Nigeria; the fact that this unique number is linked to a person’s account in other banks makes it difficult for a person to own different accounts with different names as was obtainable before it was introduced. This paper therefore sets out to discuss the various factors which have affected and are still affecting bank fraud in Nigeria.