Journal of Business and Management

Journal of Business and Management

ISSN: 2291-1995 (Print)    ISSN: 2291-2002 (Online)

Volume 5 (2016), No. 2, Pages 1-21

DOI: 10.12735/jbm.v5n2p01

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Security Challenge, Bank Fraud and Commercial Bank Performance in Nigeria: An Evaluation

Kanu Clementina1  Idume Gabriel Isu2 

1Accountancy Department, Federal University, Ebonyi State, Nigeria
2BURSURY Department, Federal University, Ebonyi State, Nigeria

URL: http://dx.doi.org/10.12735/jbm.v5n2p01

To Cite this Article     Article Views: 661     Downloads: 329  Since deposited on 2016-07-26

Abstract

The issues of insecurity and fraud in the banking sector of the Nigerian have become the concern of everyone. Achumba, Ighomereho, and Akpor-Robaro (2013) maintain that the concrete evidences of these incidences in different parts of Nigeria indicate that the security challenge in the country is enormous and complex and would continue to be, if the situation remains unabated. This paper evaluates the insecure situation, bank fraud and their impact on bank performance. This evaluation requires the formulation of some testable hypotheses to confirm the impact of insecurity and fraud on bank performance. Multiple regression analysis was applied to determine if there is any significant relationship between the indicators of bank insecurity, fraud and the earnings before tax (the indicator of bank performance) of the Commercial banks in Nigeria. Data were obtained through secondary sources on the indicators of bank insecurity and fraud and the earnings before tax of Commercial banks in Nigeria for the period 1991 -2013 from Nigeria Deposit and Insurance Corporation’s Annual Report. The results of the study demonstrate an inverse relationship between Expected Losses on insecurity and Fraud (ELF), Number of Fraud Cases (NFC) and Number of Staff involved in Fraud Cases and earnings before tax of commercial banks in Nigeria. The results of the Granger causality test show a uni-directional causality from bank insecurity and fraud to commercial bank performance. However, the Volume (Amount) of bank insecurity, Fraud cases (VFC) and earnings of commercial banks in the parsimonious ECM show positive but significant relationship. We therefore recommend that both government and banks should team up and involve foreign intervention in fighting insecurity and fraud in the banking sector. New staff of the bank should have a guarantor who will pledge a reasonable sum with the bank in case the staff is involved in fraud. Directors should be knowledgeable in accounting and banking and must have stakes in the bank.

JEL Classifications: M20

Keywords: bank, security challenges, fraud, bank performance

To Cite this Article: Clementina, K., & Isu, I. G. (2016). Security challenge, bank fraud and commercial bank performance in Nigeria: An evaluation. Journal of Business and Management, 5(2), 1-21. http://dx.doi.org/10.12735/jbm.v5n2p01

Copyright © K. Clementina & I. G. Isu

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This article is published under license to Science and Education Centre of North America. This is an Open Access article distributed under the terms of the Creative Commons Attribution 4.0 International License.

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Security Challenge, Bank Fraud and Commercial Bank Performance in Nigeria: An Evaluation
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