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Electronic Fraud and Financial Performance of Banks: Experience from Nigeria

Ele, Linus Egwu; Nwafor, Ifeanyi Nwankwo; Eze, Onyekachi Richard

Abstract

This research work investigated the effect of electronic fraud on the financial performance of banks in Nigeria. The specific objectives were: to investigate the effect of wire fraud on the financial performance of banks in Nigeria, to evaluate the effect of securities fraud on the financial performance of banks in Nigeria, and to determine the effect of credit card fraud on the financial performance of banks in Nigeria. The study adopted the ex post facto research method with panel data. The analytical technique adopted was the panel least squares regression method. The summary of the major findings of the study are: the study found that amounts lost to fraud through wire transfer has significant negative effect on financial performance of selected deposit money banks in Nigeria. [coefficient $=-3.015834$ with p-value of 0.0003]; the study found that amount lost to fraud through securities transaction has significant negative effect on financial performance of selected deposit money banks in Nigeria. [coefficient $=-8.010412$, with a p-value of 0.0417], and the study found that that amount lost to fraud through credit card transactions has negative insignificant effect on financial performance of selected deposit money banks in Nigeria. [coefficient $=-1.380107$ with a p-value of 0.3041]. The study concluded that electronic fraud has significant negative effect on the financial performance of banks especially with regards to the total assets. Based on the findings, the study recommended that: the banks should take steps to strictly monitor wire transactions to be able to detect fraudulent wire calls, the banks should place a hold on securities transactions that are traceable to Ponzi schemes; and the banks should make efforts to help customers protect their credit cards.

Keywords

Credit Card TransactionDeposit Money BanksElectronic FraudFinancial PerformanceMonetary transactions

References

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