An Empirical Analysis of Social Impact of Fraud on the Nigerian Banking Industry

Abstract

The study sought to investigate the social impact of fraud on the Nigerian banking industry. Secondary data of Fraud, Actual/Expected Loss and Return on Equity were obtained from Annual Reports and Accounts of Nigeria Deposit Insurance Corporation (NDIC) and the commercial banks during the period 1990-2014.  The Ordinary Least Square (OLS) with its Best Linear Unbiased Estimate (BLUE) Property was used in analyzing the data via the Statistical Package for Social Sciences. The findings showed that banks in Nigeria are significantly thriving from, and may also be complicit in, the high rate of fraud in the country. We also discovered a negative social impact of fraud on the Nigerian banking industry. Based on the findings, we recommend that the EFCC and other agencies responsible with the task of tracking fraud in Nigeria should earnestly beam their searchlights on the banks, being possible conduit pipes for corrupt financial flows. Also, banks should be enjoined to take, and continue to take, a closer look at their own operations, declining to provide tolerant environments for fraud, among others.

Keywords: Social Impact, Fraud, Actual/Expected Loss, Banking Industry, Society Expectation, Nigeria