Perceptions of Risk Management and Bank Fraud Prevention in Ethiopian Banks: Employees' Perspective

Abstract

Effective bank fraud prevention and management is crucial for financial institutions to mitigate risks and protect their assets. This study explores how employee perceptions of risk management practices relate to their perception of the bank's effectiveness in preventing fraud. An ordered probit model was used to analyze survey data collected from 475 employees across 17 Ethiopian private and public banks. The analysis revealed significant positive relationships between several bank practices and perceived fraud prevention effectiveness. Employees who perceived more robust risk management, control measures, training programs, technology use, and incident response protocols were more likely to believe the bank effectively prevented fraud. These findings highlight the importance of specific bank practices in fostering a positive employee perception of fraud prevention. Banks can leverage this knowledge to develop targeted strategies for strengthening areas with the strongest positive associations with perceived effectiveness. These can lead to improved employee awareness, better use of technology for fraud detection, and, ultimately, a more secure banking environment.

Keywords: Bank Fraud Prevention; Employee Perceptions; Ordered Probit Model; Risk Management; Control Measures; Training; Technology, Incident Response

DOI: 10.7176/RJFA/15-7-05

Publication date: July 30th 2024