Electronic fraud: an emerging cause of bank failure in Nigerian deposit money banks
| DOI | https://doi.org/10.1108/JMLC-01-2021-0009 |
| Published date | 05 November 2021 |
| Date | 05 November 2021 |
| Pages | 249-263 |
| Author | Folowosele Folarin Akinwale,Ikpefan Ochei Ailemen,Isibor Areghan |
Electronic fraud: an emerging
cause of bank failure in Nigerian
deposit money banks
Folowosele Folarin Akinwale,Ikpefan Ochei Ailemen and
Isibor Areghan
Banking and Finance Department, Covenant University, Ota, Nigeria
Abstract
Purpose –This study aims to review the degree to whichfraud and other unethical practices especially in
the digital spacehave affected the Nigerian banking industry both in the past and present, and how it will be a
growing concern in the imminent future.The objective of the study was to examine the impact of electronic
fraud on the qualityof assets and return on assets of Nigerian deposit money banks.
Design/methodology/approach –The research used secondary data for the periods 2006 till 2018,
which were collectedfrom the Nigeria Deposit Insurance Corporationannual reports. Descriptive analysis and
the ordinaryleast square method of regression analysiswere used for data analysis.
Findings –Findings revealed that electronicfraud cases increased progressively over most of the years of
study, whichcan be attributed to the increased bank products thatare electronic-based.
Originality/value –Many of the reviewed literature examined electronic fraud and itsimpact on bank
profitabilitybut this study examined the cause of electronic fraud and what can be done to curtailit.
Keywords Electronic fraud, Nigerian deposit money banks, Bank failure, Return on assets,
Quality of assets
Paper type Research paper
1. Introduction
Fraud can be likened to a communicable disease that does not only disrupt the banking
sector but its effectsare felt across every other sector’s economy. This hasa negative impact
on the liquidity of banks and their performances are beginning to deteriorate (Ojeaga et al.,
2014;Gitau, 2016). The financial institution is the most important part of the Nigerian
economy and a major player here is thebanking industry, which is easily referred to as the
central nervous system to the economy with notable stress on its rolesand trials (Dennis,
2013).
The banking sub-sector in Nigeriaisa mainstay of the nation’s economy as it is involved
in the administration and marshaling of financial resources to various segments of the
economy thus, allowing theeconomy to grow and expand. The banking subsector, at times,
venture into the financing of projects in the realsector of the Nigerian economy, therefore,
provides anchor for the process of the growth of the economy and nation’s development
(CBN, 2009;CBN, 2016). Any tension, therefore, in this sub-sector will cause serious
distortion in the nation’seconomy.
Electronic banking in Nigeriacan be traced to its origin back to when the banking sector
was deregulated in 1986. The consequenceof this deregulation led to a great feat resulting in
transformation via the use of computers and enhancement in the delivery of service to
bank customers. Introductionof new products became a method for competitive advantage
within the banking industry whereas patroncomplexity stood as a challenge for these
Electronic
fraud
249
Journalof Money Laundering
Control
Vol.25 No. 1, 2022
pp. 249-263
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-01-2021-0009
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1368-5201.htm
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