ENEMS MICROSYSTEMS RESEARCH SPOT: banking and finance

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Saturday 4 March 2023

THE CAUSES AND PROBLEMS OF FINANCIAL DISTRESS IN NIGERIAN BANKING SECTOR

A CASE STUDY OF FIRST BANK PLC

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

The importance of capital as a necessity though not sufficient condition for economic growth is recognized in development economy where it is believed that the position of adequate financial resources is a pre-requisite for industrial transformation.

Experiences in some countries notably Japan, India and Germany have shown that banks if sufficiently in their respective countries could serve as an engine of growth to greatly assist the promotion of rapid economic transformation of any nation. Banks all over the world occupy a strategic and lending position in financial sector. Many Nigerians see banks as places nobody can mess up. Hence, their accepting institutions as the safety place for depositing their money. It is equally because of the confidence they have in the industry as a whole that over the years, many of them imbedded this habit of savings, which in turn is very necessary of positive economic development of the nation.

Ekechi (1995) said that confidence is a pre-requisite for economic recovery and sustained growth, but confidence is not a gift. It must be earned through the adjustment effort or rather confidence is rented because it is never yours and because it can be taken away anytime. The adjustable effort has to go on each and everyday”.

One legacy the structural adjustment programme (SAP) left on its trials is the increase in the number of banks in the country before the introduction of SAP in 1986. The number rose to about 127 as at August 1995. This phenomenal growth of banks was initially hailed as a healthy development in the economy because it was to spread the resources in the economy.

Because of the importance of banks monetary authorities pay great attention to the banking industry. In this process, they are sometimes faced with the problems of how best to handle financial distress in Nigeria banking sector. Financial distress in Nigerian banking sector date back to 1930 when the industrial and commercial bank, (ICB) failed one year after it’s established.

As Hornby defined distress as “great pains, discomfort of sorrow caused by wants of money or other necessary things.

John Ebhodaghe in explaining financial distress “two major problems are usually of serious concern. These are liquidity and insolvency”. He went further to explain liquidity as the inability of banks to meet its inabilities as they mature for payment while insolvent when the value of its realizable asset is less than the total value of liabilities.

The reasons for early distress of banks are summarized in the following features, which characterized the banks since during the period.

Foreign banks domination of deposit base, credit availability.
Banks services tailored to the needs of the expatriates.
Indigenous bank boom and failure resulting from under capitalization and poor quality management.
Lack of banking, control and direction.

Recently, it was realized that the development of statistical based, early warning system for problem banks identification would greatly assist regulators on classifying banks into sound and unsound categories. Worthy of notes is Decree No. 26 of August 1992 that prescribed the following for banks to be adjusted healthy.

Specified cash reserve
Specified liquidity ration
Adherence to prudential guidelines
Statutory minimum paid up capital requirement Adequate capital ration
Sound management.

Any bank, which did not satisfy any or all the listed factors, is adjudged unhealthy. It must be expressed here that there exist a thin dividing line between a distressed and unhealthy banks. This is because a bank, which is unhealthy in the short-run, may become distress in the long run. At the core of distressed bank, are twos basic problems compared to liquidity the later could not be neglected because it is an ominous sign of insolvency.

Therefore, in assessing the financial condition of a bank, it is customary to use the CAMEL framework. Also ownership structure and types of banks are important factors on explaining the financial condition of a bank. The recent NDIC report revealed that ownership structure was used to explain the degree of financial distress seven out of eight banks, that were financially distressed were either owned or controlled by the state government.

Another indicator of a distressed bank used in most countries of the world is a classified asset that exceeds 100 percent of shareholders fund. Following from above, it is therefore reasonable to conclude that a distressed bank is one that is technically insolvent the financial distress is caused by a number of factors including macro-economic conditions, the inhibitive policy of government capital adequacy, wide spread incidence of frauds, non-performing loans, unbraided risk by banks and so on. The effect of financial distress in Nigerian banking sector is a distressed economy. The causes and problems and the ways out of this financial distress will be discussed in details in this work.

1.2 STATEMENT OF THE PROBLEM

Financial distress in Nigerian banking sector dates back to colonial era. One of the early Nigerian indigenous banks, the industrial and commercial banks, the industrial and commercial banks (ICB) failed in the early 1930’s and between 1992 – 1994, the central bank of Nigeria (CBN) and Nigerian Deposit Insurance Corporation (NDIC) were face with the problems on how best to prevent the financial distress in the banking sector. Within this period, more than thirty banks had been adjudged financially distressed.

The question remains what are the causes of these financial distresses in the banking sector? According to Charles worth, research arises when there is problem to solve, peculiarities or puzzle about a phenomena or the question to attaching meaning to identify and examine the causes and problems of financial distress in Nigerian banking sector.

1.3 OBJECTIVES OF THE STUDY

In writing this project, the researcher had certain objectives in mind. In line with this following are the objectives of this write up.

To identify the extent to which low capital base has contributed to the financial distress in Nigerian, banking sector.
To identify the extent to which multiplicity of banks has contributed to the financial distress in Nigerian baking sector.
To ascertain how inefficient management has contributed to financial distress in Nigerian banking sector.
To identify to a large extent how fraudulent practices has contributed to the financial distress in Nigerian banking sector.
To identify the effects of financial distress in Nigerian banking sector.
To recommend possible ways of preventing financial distress in Nigerian banking sector.

1.4 SIGNIFICANCE OF THE STUDY

This study will be immense benefits to the Nigerian banking sector. This will enable them to know the causes of financial distress in Nigerian banking sector, and based on the recommendation of this study, they will know how to prevent financial distress.

Government will also benefit. As the operators of the economy, they will know the causes and effects of financial distress in the economy. Likewise, the depositors and potential investors will also benefits. There is a need for a development conscious country like Nigeria, to evaluate the performance of her financial sectors so as not to jeopardize her development efforts. It is helped that these findings will add to existing literature on causes and problems of financial distress in Nigerian banking sector.

1.5 RESEARCH QUESTIONS

To what extent has low capital base contributed to the financial distress in Nigerian banking sector?
Does multiplicity of banks contributed to the financial distress in Nigerian banking sector?
Does inefficient management contribute to financial distress in Nigerian banking sector?
To what extent has fraudulent practices contributed to the financial distress in Nigeria banking sector?
What are the effects of financial distress in Nigerian banking sector?
What are the possible ways of preventing financial distress in Nigeria banking sector?

1.6 RESEARCH HYPOTHESIS

To come out with a reliable result, the following hypothesis were formulated and tested statistically.

H_o: Low capital base has not contributed to the financial distress in Nigerian banking sector.

H_i: Low capital base has contributed to the financial distress in

1.7 SCOPE OF THE STUDY

This research work covers the causes and problems of financial distress in Nigerian banking sector with reference to First Bank Plc.

1.8 LIMITATIONS OF THE STUDY

This research work covers the causes and problems of financial distress in Nigerian banking sector with reference to First Bank Plc. In the cause of this study, the researcher could not carry out the work extensively due to the following constraints.

TIME CONSTRAINTS: Time was my greatest enemy as I had to cope with my class work, assignments, home work, and the project work at the same time, and moreover, most of the materials for the project work are not located in one place.

FINANCIAL CONSTRAINTS: Finance was my major constraints since I don’t have enough fund for running around and this hindered the full coverage of the work.

1.9 DEFINITION OF TERMS

BANKS: Banks are financial institutions, which hold themselves out to the public (individuals, firms, organization, and governments) by accepting deposits and giving out advances as well as performing other customers.

FRAUDS: Fraud is intentional distorting twisting or changing of financial statement or using criminal deception to deceive someone in order to achieve illegal advantage

LIQUIDITY: Liquidity is inability of a bank to meet its liabilities as they mature for payment.

INSOLVENCY: Insolvency is when the value of realizable assets of a bank is less than the total value of its liabilities.

CAPITAL ADEQUACY: Capital adequacy is when banks through proper fund management has enough capital to serve as a fall back and at course, shock absorber in the event of losses resulting from business transactions.

SHAREHOLDERS: shareholders are the owners of the bank, whose names were described to the memorandum of the bank when the bank is registered. This is done through the purchase of the bank’s shares.

PAID UP CAPITAL: This refers to that part of the issued capital, which has been paid-up.

DISTRESS: This means great pains; discomfort or sorrow caused by wants money or other necessary things.

Tuesday 28 February 2023

THE EFFECT OF EXCHANGE RATE DEREGULATION ON CAPACITY UTILIZATION IN MANUFACTURING INDUSTRIES IN NIGERIA

(A case study of Anambra Motor Manufacturing Company, Enugu)

ABSTRACT

This research work explores the effect of exchange rate deregulation on capacity utilization in the Nigerian manufacturing industries in Anambra Motor Manufacturing Company, Enugu. The data used for this study were obtained through primary and secondary sources of data collection and various sources like the statement of accounts and annual report published by the Central Bank of Nigeria. The variable used are Average manufacturing capacity utilization rate Inflation rate Exchange rate Ratio of government capital expenditure to GDP Commercial bank loans and Anambra motor manufacturing company. The result shows that exchange rate, federal government capital expenditure to GDP, commercial bank loans and advances to Anambra motor manufacturing company has a positive effect on manufacturing capacity utilization. Recommendations include the adoption of economic policies that ensures price stability and at the same time achieve target objectives. Exchange rate deregulation policy promotes manufacturing capacity utilization and therefore fiscal policy measures involving increased government capital expenditure to Anambra motor manufacturing company and those which raise the aggregate demand in the economy are advocated.

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Industrial development, particularly the promotion of manufacturing sectors, has been the basic driving force for a relatively high economic growth of both developed and developing countries of the world. In viewing the contribution of the manufacturing sector to the growth of the gross domestic product of some selected countries (IMF 2001), pointed out that the long term growth rate of the manufacturing value added in china was 10.7% and it increased to 14.7% during the period of 1990-1998. The growth rate of India’s manufacturing sector remains constant.

Industrialization has not taken serious root in Africa and indicators of growth in manufacturing show a continent at a standstill. In the 1980’s, manufacturing sector’s contribution to GDP, accounted for 36.6% of the total for the whole of Africa. Nigeria’s manufacturing sector is faced with capacity underutilization and this has been a threat to the economic growth and development of the country. This sector has been agreed to determine the rate of import and export of the country and plays an important role or have a great influence on the gross domestic product (GDP) of the country.

There is much capacity availability in the country but these capacities are underutilized and this can be argued from the fact that the manufacturing sector has not been impressively doing fine since till date and this is as a result of lack of the following :

Employment Rate: This connotes the fact that there is low level of human resource utilization in the country’s manufacturing sector. Human resources has been said to be one of the most essential factors in the manufacturing sector or any organization.
Effective monetary policy: This is essential for the increase in output and growth of the sector, price stabilization (factor price and consumer price), full employment, sustainable balance of payment, exchange rate stability, to make use of most suitable interest rate despite the above mentioned role of effective monetary policy in the economy, and manufacturing sector in particular, it is lacking and unavailable in the country.
Effective Fiscal Policy: A good fiscal policy plays an important role in the economic development of a country such role as: maintaining an economy at full employment so that the savings capacity of the economy is not e impaired and also raise marginal propensity to save by the community as far as above as the propensity as possible without discouraging workforce.
Upgrading and Development of Natural Resources Endowment: These natural resources in economics is classified under the heading of “land “ as a factor of production, the gravity of these natural resources are high in Nigeria, yet there exists low productivity due to low or poor management of the resources leading to underutilization of these resources.

All these balls down to political instability as the main cause of the sector’s poor performance. The country has witnessed many and frequent change of government and leading to frequent change of policy measures for the manufacturing sector in Nigeria and most of which are unfavorable to the sector, the frequent change also gave rise to poor planning/ implementation and policy discontinuity hampering the growth of this sector.

Taking Nigeria as a case study in Africa, we notice that after so many years of various policy initiations, indicate in terms of it’s contribution to GDP shows that the manufacturing sector performed below expectation. Available data shows that the manufacturing sector performed below expectation. Available data shows that the sector’s contribution in nominal value to GDP in 1982, was N128.6 million, and thereafter, there was a sharp decrease in 1983 to N94.8 million, and has remained relatively so till 1987 which recorded a sharp increase to N130.8 million. It maintained a continuous annual decline and stood at N135.4 million in 2000. In spite of this nominal increase, its contribution to GDP is falling. Its share in GDP was 8.3% in 1991. It has ever since then recorded a continuous fall in its share in GDP, (CBN 2000). One of the reasons for the low share of manufacturing sector in GDP is the prevalence of low capacity utilization. It is a known fact that manufacturing sector in the developing world and indeed Nigeria, is not as strong as those in advanced countries, the installed capacity are usually not fully utilized. It is therefore the concern of this research to find out the factors responsible for the low capacity utilization in Nigeria.

1.2 STATEMENT OF THE PROBLEM

Players in the Nigerian industrial and manufacturing sector can be classified into four groups namely; multinational, national, regional and local. Apart from the multinational operators most of the other players have disappeared in the last two decades, due to unpredictable government policies, lack of basic raw materials, most of which are imported.

Today, the Nigerian Industrial and manufacturing sector accounts for less than 10% of Nigeria’s GDP with manufacturing capacity utilization remaining below 35% for the most part of the last decade. The history of industrial development and manufacturing in Nigerian is a classic illustration of how a nation could neglect a vital sector through policy inconsistencies and distractions attributable to the discovery of oil. The near total neglect of agriculture has denied many manufacturers and industries their primary source of raw materials. The absence of locally sourced inputs has resulted in low industrialization. Some of the constraints faced in this sector include;

High interest rates

Unpredictable government policies

Non implementation of existing policies

Lack of effective regulatory agencies

Infrastructural inadequacies

Dumping of cheap products

Unfair tariff regime

Low patronage

Globalization and liberalization pose challenges to the Nigerian industrial sector. The impact of these global trends will intensify competition, reduce protection, increase focus on product quality and increased expenditure on research and development. The prospects of manufacturing in Nigeria are bright, given the nations nascent democracy, a market size of over 120million people, rich mineral and other resources, size of the West African market as well as cheap and abundant labour. Developing Nigeria’s industrial sector requires the concerted efforts of government and the private sector to create an environment that would encourage investments, primarily by Nigerians as a firm basis for attracting and sustaining foreign investments in the sector. A fully developed industrial sector would provide a firm basis for sustainable economic growth and development.

This research work will be solely based on assessing the benefits of derived from determining the capacity utilization in the Nigerian manufacturing sector ranging 1980-2009. Here am going to carry out a critical research with the aim of discovering the rate of capacity utilization (high or low rate) in our manufacturing sector as well as its effects (positive or negative) on either the improvement or non-improvement in the manufacturing sector in Nigeria by providing reliable answers to the following questions;

What are the trends in capacity utilization in the Nigerian manufacturing sector?
Why and what are the causes for the low improvement in capacity utilization in Nigeria manufacturing sector?
What are the major factors that determine capacity utilization in Nigeria manufacturing sector?

All the above questions are meant to cover the years between 1980 and 2009.

1.3 OBJECTIVE OF THE STUDY

This research work is carried out to attain certain aims and objectives which will be necessary to solving the problem of low capacity utilization in Nigeria manufacturing sector and serve as a guide for and favorable to business men and women and the nation’s economy at large. The various objective of this study can be stated below as follow:

Identifying and critically analyzing the major factors that determine capacity utilization in Nigeria manufacturing sector.
To examine the trend in capacity utilization in Nigeria manufacturing sector.
This research work is aimed at suggesting measures which will improve the rate of capacity utilization in Nigeria manufacturing sector and consequently accelerate the growth of manufacturing output in the country.

1.4 SIGNIFICANCE OF THE STUDY

The Nigerian manufacturing sector has been described as the major sector that contributes to the investment development of any economy whether developed and developing economy.

In Nigerian context, several research and studies have been conducted to investigate the determinants of capacity utilization in this sector (manufacturing), basically on its contributory role to economic growth and development.

Therefore the method and scope (sample size) used by this former authors need to be updated in other to close their historical gap. Thus I intend with this research work to bridge the gap by bringing the samples used to the nearest years and to also subject some of the variables used by this authors to co-integration test and unit root test to avoid spurious result.

This study is very important for development and growth in potential input and output in the manufacturing sector of the economy, it is very important for policy and project identification, preparing, appraisal, implementation and evaluation which will in turn aid and foster the rate of capacity utilization in the manufacturing sector of Nigeria.

1.5 RESEARCH QUESTIONS

What are the major factors that determine capacity utilization in Nigeria manufacturing sector?
Is there any trend in capacity utilization in Nigeria manufacturing sector?
What measures should be taken to improve the rate of capacity utilization in Nigeria manufacturing sector and consequently accelerate the growth of manufacturing output in the country.

1.6 RESEARCH HYPOTHESIS

Since the major problem and reason for this research is identifying the major factors determining capacity utilization in Nigeria manufacturing sector, the hypothesis will be stated as follows:

H₀: All determinants of capacity utilization in Nigeria manufacturing sector have significant impact on the capacity utilization growth in Nigeria manufacturing sector.

H₁: The determinants of capacity utilization in Nigeria manufacturing sector have insignificant impact on the capacity utilization growth in Nigeria manufacturing sector.

1.7 SCOPE OF THE STUDY

The scope entails the period of analysis and the periods covered by this study is a period of 5 years and this is between 2010 and 2014.

1.8 LIMITATIONS OF THE STUDY

Some practical limitations are lack of adequate data, information, difficulties encountered in collecting and arranging the data’s, this research work also had to contend with time and other resources constraint like finance, cost consideration also posed a serious problem.

1.9 DEFINITION OF RELEVANT TERMS

Exchange rate: The rate at which a unit of the currency of one country can be exchanged for a unit of the currency of another country.

Deregulation: To free something such as an organization or industry from regulation.

Capacity utilization rate: The percentage of total production capacity that a company, industry, or economy is using.

Manufacturing: to make something into a finished product using raw materials, especially on a large industrial scale.

Industry: organized economic activity connected with the production, manufacture, or construction of a particular product or range of products.

THE CONTRIBUTION OF COMMERCIAL BANK TO SMALL SCALE INDUSTRIES

(A case study of United Bank for Africa Plc)

ABSTRACT

The research work titled “The Contribution of Commercial Bank in Small Scale Industries” a case study of United Bank for Africa (UBA)” is aimed at rating the role commercial banks contribute to the financing of small scale industries. Questionnaires was administered and it was deduced that small scale industries aids self-reliance and promote employment opportunities but the stringent collateral require posed a great challenges as available funds is needed for the establishment, and development of small scale industries. Based on the finding, recommendations were suggested of which government should provide incentives that will help banks reducing the interest rate on load so as to stimulate and encourage entrepreneurs.

CHAPTER ONE

1.1 INTRODUCTION

Small scale business has been an important element in this country drive towards a self-reliance economy.

This is based on the realization that small scale enterprise are desirable worldwide, hence, it is an avenue for reducing the role of employment in the country and thereby contributing to the gross domestic product (GDP) of the nation.

In the developed countries today, technology advancement was due to the establishment of small scale enterprise or industries. Small scale enterprises are considered as a pivot for technology take off and self-reliance of any nation.

In the commercial world, there are various kinds of business undertaking. The business activities range from the private enterprise to public corporation. A small scale enterprise is defined as business which is independent small and localized, most small scale business is operated by private individuals.

As a result of the immense contribution of commercial banks to the development of small scale business in Nigeria, there is need for the government to be seriously involved by providing the needed resources, supervision and enabling environment for it to thrive.

1.2 BACKGROUND OF THE STUDY

The successive development plans of Nigeria have laid emphasis on the attainment of self-reliance. The need for this national objective is because much is expected from individuals from the view point of providing employment opportunities self-reliance in basic food and material production high per capital income, foreign exchange earnings and the production of industrial raw materials.

Okporobie (1989), observes that Nigerian small scale industries continued to decline despite the called priority given to the sector.

However, the discovery by the central bank that this policy was not enough by itself lead to the central bank request with effect from 1970/80 that all commercial bank must reserve a proportion of the minimum credit allocation to indigenous borrowers for small scale Nigeria enterprise. The target prescribed in 1979 was ten percent (10%) which subsequently rose to sixteen percent (16%).

Even though available data showed that performance of commercial banks against this directive has been disappointing. The central bank intends to spare no effort in ensuring that bank fully couple without compromising the smooth functioning of the nation banking system.

He observed also, that without the development in our industrialization must address the basic issues of creating linkage without the economy to begin to produce real input to our small scale industrial activities.

Nzewi and Ozo (1985), observed that empirical evidence indicate that strong producer incentives to small scale industrialist are necessary, not also only to meet the for requirement but also to provide growing input supplies and demand as a foundation for sustained industrial growth.

Ekenyong and Nyong (1992), observed that small scale enterprise are regarded as an organic part of a viable structure for the attainment of meaningful economy development in developing economic like Nigeria.

They are significantly more cost effective in bringing about development than large enterprises because of the perceived linkage and multiplier effect which small scale enterprise, have on the performance of the economy and economic growth in general.

Osengameh (1989), observed that the strength that make small scale enterprise more emendable for assistance areas as following:

Personal commitment of the proprietor whose life saving usually from tat startup capital.
Low initial capital outlay requirement.
Amenability of business advisory service because of their small size which make them more responsive to improve suggestion.

Olashore (1987), observed that time firm four main sources of enterprises financing open to small scale industry in Nigeria are:

Formal financial institution such as commercial bank, merchant banks, insurance companies and the development banks.
Informal financial landlords, credit and saving associations, friends and relations, personal saving and
Other financial scheme, NERFUND, NEXIM.

In 2001, there was an introduction of small and medium industries equity investment scheme (SMEs) in which N359 million was set aside to date by bank under small and medium industries equity investment scheme.

Through UBA, small and medium scale enterprise (SME) development, the banks has remained, in forefront of SMEs financing, nation was extended to the SMEs as at 31^st March, 2004. Small scale industries is any industry, not exceeding N750,000 including working capital but exceeding cost of land.

It is also defined by center for industrial research and development of Obafemi Awolowo University, Ile-Ife as those industries whose total asset in plan, equipment and working capital do not exceed N250,000 with not more than 50 employees.

1.3 STATEMENT OF THE PROBLEM

The problem of credit to small scale industries may not necessarily be as a result of financing insufficiently but rather for some other reasons among which are:

Insufficient preparation on the part of small scale entrepreneur in their request for credit assistance and information gaps as to range of funding institution and scope of services available in those institutions.

Moreover, servicing of small business account is relatively experiencing risky and difficult to monitoring with low turnover of account.

However, the parishioners in the sector of small scale industry do not display competence in preparing justification for their project. They are based on personal rudimentary information and speculation. At times when they seek the advice of consultants, the outcome that are made figures project based on assumption which are most of their times unrealistic as a result such proposal are not rightly rejected by banks.

There are suitable when credit demands in this sector are not in compliance in this government monetary policy and credit guidelines which must be adhered to be banks.

The researcher identifies these problems and considers it necessary to carry out study on them.

1.4 OBJECTIVES OF THE STUDY

The objectives of the study include:

To ascertain the extent to which the UBA bank of Nigeria Plc has helped to finance small scale industries.
To identify the problems encountered by small scale industrialist in obtaining finance from UBA bank of Nigeria Plc.
To evaluate various measures introduced to boost industrial production and its financing and how this has affected realization of the set goals.
To determine the causing changes in small scale industrial financing by UBA bank of Nigeria Plc.
To make suggestion and recommendation based on the data generated by the study.

1.5 RESEARCH QUESTION

In the course of the research work, the researcher were able to ask questions which were understood to have assisted in gathering relevant information, below are some of the question:

To what extent has the UBA bank of Nigeria Plc helped to finance small scale industries?
What are the problems encountered by the small scale industrialist in obtaining finance from UBA bank of Nigeria?
What are the various measure introduced to boast industrial production and its financing and how this has affected the realization of the set goals?
What are the causes of change in small scale industrial financing by UBA bank of Nigeria Plc?
Does any linear relationship exist between lending to small scale industries and economic recovery and self-reliance on the economic?

1.6 SIGNIFICANCE OF THE STUDY

The study will highlight problems associated with the role of commercial banks in financing small scale industry in Nigeria; it will give information on the possible areas for improvement.

Furthermore, the study will help commercial banks to access and appraise the roles in financing small scale industry in Nigeria, moreover suggestion and recommendation made in these project will help policy makers formulate new economy policies maintain or modify the existing ones.

It will also help small scale entrepreneur to make sufficient preparation in their request for credit allowance, it will guide the entrepreneur in making credit demands that are in compliance with government monetary policy. It also help the entrepreneur to display competence in preparing justification for their project, it will equally serve as a guideline to researcher who may wish to research on this study in the future.

1.7 SCOPE OF THE STUDY

The scope of the study is the contribution of commercial bank to small scale industry in Nigeria. A case study of United Bank for Africa (UBA) of Nigeria Plc. It does not cover the role of commercial bank in financing medium and large scale industries.

1.8 STATEMENT OF HYPOTHESIS

H_o: There is no significance relationship between lending to small scale industries and economic recovery and self-reliance.

H_i: There is significance relationship between United Bank for Africa (UBA) of Nigeria Plc lending to small scale industries and economic recovery and self-reliance.

1.9 LIMITATION OF THE STUDY

The constraints impose on the researcher while carrying out this project includes:

Time: Study of this nature needs a relatively long time during which information and inference could be drawn. The period of this study was short, hence time pose as a constraint to the researcher.
Cost: The researcher would have extended the survey to areas but limitation here includes cost of transportation to source for materials.
Scarcity of statistical data: Lack of statistical data from our financial institution like Central Bank of Nigeria (CBN).
Ministry of financial and economic development and commercial banks pose a constraint. Commercial bank adhere strictly to the rule of secret, in banking terms they refuse to release information.

1.10 DEFINITION OF TERMS

Small scale industry: Any industry with capital not exceeding N750,000 including capital but excluding cost of land. These are business that requires few people to run the management of the business.
Commercial bank: A financial institution that acquires deposit from saving surplus unit and give out loan to saving deficit unit.
Industrial development center: Provide management technical, consultancy and extension service for the small scale.
Indigenization decree: A decree that stipulate that most business become at least sixty percent (60%) owned by Nigeria.
Sole proprietorship: It is a business owned and controlled by one person presumably assisted by one or more person.
C5: Small scale industry credit scheme, the C5 are: Capital, Capacity, Collateral, Condition and Capital.

APPRAISAL OF THE ECONOMIC IMPLICATION OF ELECTRONIC BANKING IN NIGERIA BANKS

(A CASE STUDY OF DIAMOND BANK)

CHAPTER ONE

1.1 BACKGROUND OF THE STUDY

Before the emergence of modern banking system, banking operation was manually done which lead to a slow down in settlement of transactions. This manual system involves posting transactions from one ledger to another which human handles. Figures or counting of money which should be done through computers or electronic machine were computed and counted manually which were not 100% accurate thereby resulting to human errors. Most bank then use only one computer in carrying out transactions which ameliorate the sluggish nature of banking transaction.

Nigeria do not embrace electronic banking early compared to developed countries. Nigeria adopted electronic banking system in the early 2000s. During the introduction of electronic banking system, the use of raw cash was said to have bred corruption through the “cash and carry syndrome” usually linked with the swift movement of Ghana-must go” bags by some politicians. Such bags as some analyst say, are a major source of corrupt practices as dubious persons seeks to bribe their way to avoid been checked in some sensitive areas or places in a corrupt society.

Since electronic banking started in all Nigeria banks, it has been a woe for civil servants; checks show that some staff in establishments such as the national boundary commission for instance, are yet to receive their salaries for the previous months as efforts to electrically transfer salaries into their account have failed according to Ibrahim, D. (2009).

“One bank will tell you it has transferred your salaries but the supposed recipient bank will tell you it has not received anything leaving you even more confused”, says John, I. (2009). Olekah, J. (2009) while acknowledging the initial hiccups that dogged the system, advises stakeholders against being discouraged as such “teething problems” are normal.

James, A. (2009) a banker reported to vanguard annual report that “we should not destroy electronic-banking by looking at the negative aspects, we must strive towards perfecting it”. James, A. (2009) also says that the volume of data generated by the Government ministry Agencies is much making it a bit difficult for banks to cope, Mathew S. (2009) a worker says in his report to vanguard annual report on banks and cards that government should have done its home work “very well” before introducing the system, “they plugged us into a system they were not prepared for and the result is untold hardship visited on innocent people”.

At this juncture, is good to know what e-banking is all about.

According to Anyawaokoro, M. (1999). Electronic banking is defined as the application of computer technology to banking especially the payment (deposit transfer) aspects of banking. He also defined electronic banking as a system of banking with an electronic communication network which permits on-line processing of the same day credit and debit transfers of funds between member institutions of a clearing system.

According to Clive, W. (2007) in his Academic dictionary of banking, electronic banking is defined as a form of banking in which funds are transferred through an exchange of electronic signals between financial institutions, rather than an exchange of cash, cheques or other negotiable instruments.

According to Omotayo, G. (2007) defines electronic banking as a system in which funds are moved between different accounts using computerized on line/real time systems without the use of written cheques.

According to Edit, O. (2008) in international Journal of investment and finance, electronic banking is defined as a system by which transactions are settled electronically with the use of electronic gadgets such as ATMs, POS terminals, GSM phones, and V-cards e.t.c. handled by e-holders, bank customers, and stake holders.

1.2 STATEMENT OF PROBLEMS

As earlier pointed out, there is delay in payment of cheques which lead to the adoption of electronic banking system. Adoption of electronic banking which suppose to ease banking transactions rather resulted to woes to customer. Most people complain of time wasted in banks. This occurs when there is power failure in banks resulting to slow down in operation.

Another problem that emerged was that banks do not have information backup to fall back on should there be any computer break down.

In investing in electronic banking, the country will need a large amount of financial resources in computer technology, obviously, the resource is in short supply in Nigeria, couple with high level of poverty. For an efficient functioning of electronic payment system, there must be availability of infrastructural facilities such as electricity and telecommunication network, however, power supply fluctuates and there is still constant failure links in networks.

Since early 2000s banks have been developing and introducing payment cards for their customers as well as deploy ATM’s cards. Usage was however low due to lack of interconnectivity i.e. switching platform to interconnect the ATM’s for card holders.

1.3 OBJECTIVES OF THE STUDY

This research work intends to assess the extent of electronic payment in banking activities as well as identify the various types of electronic banking.

The researcher will also evaluate the major problems associated with the development of electronic banking system in Nigeria as well as evaluate possible solutions to these problems.

The effect of electronic banking on profitability of banks will also be assessed. There are different types of electronic banking used in Nigeria banks; the researcher will like to evaluate the impact of these e-payment systems on banking industry and also assess the impact of electronic banking in Nigeria economy.

1.4 RESEARCH QUESTION

In order to get information from respondents the following questions where formulated:

What are the various types of electronic payment and the extent of electronic payment in banking activities?

In what extent can e-banking improve or enhance banking services?

What are the major problems associated with the development of electronic banking system in Nigerian?

What are the solutions to the problems associated with the development of e-banking?

What extent has e-payment affected banking activities?

The research shall attempt to find answers to these questions in the next chapter.

1.5 SIGNIFICANCE OF THE STUDY

Electronic banking in our economy today is a welcome development and also its impacts in the society are over-whelming, so this research is significant in so many ways.

It will expose the strength and weakness of electronic banking.

It will motivate banks and other economic agents to computerize their services.

Knowledge in the area of electronic banking will be advanced.

Apart from contributing to the knowledge of electronic banking, it forms a reference for future research in this area.

1.6 SCOPE OF STUDY

This research is on economic implication of electronic banking in Nigeria banks and also the various forms of payment and electronic systems used by banks. The researcher will base this work on the entire deposit money banks in Nigeria but to Diamond Bank in particular.

1.7 LIMITATION OF STUDY

Time is a major factor to the researcher as research of this kind requires enough time in gathering of data, but it was not given to carryout the research, distribution, collection and analysis of questionnaire.

Also the school system has made it difficult for student to go out in search for information by not granting exeat for student. Some banks hud information from students who desires such information in other to maintain the banks secrecy thereby making it difficult for students to gather information for their research.

Finally, finance was infact the most limited factor, in spite of this the researcher have to travel out to the sampled organization to interview some of the managers and supervisors.

CUSTOMER SERVICE AND ITS IMPACT ON BANK PERFORMANCE

(A case study of United Bank of Africa (UBA) Plc)

ABSTRACT

Customer service is the series of activities designed to enhance the level of customer satisfaction-that is, the feeling that a product or service has met the customer’s expectation and even beyond his/her expectation. The main objective of the study is to assess customer service and its effect on banking business in Nigeria. Within this framework, the study seeks to find out if waiting situations and timely services will affect customers’ satisfaction and increase service efficiency. Data were collected using questionnaires and were analyzed using descriptive statistical tools which included the use of frequency, percentages and Pearson Correlation Coefficient. The study found out that customers are dissatisfied with long waiting times, they want timey services and at their convenience. Anything short of this might be an indication that there is a pervasive problem in banking services offered. The study concluded that Customer satisfaction provides an indication of how successful an organisation is at providing products and/or services to the marketplace.

CHAPTER ONE

1.1 INTRODUCTION

The origin of banking in Nigeria date back to the Goldsmith in Verice and up-till date, personal service is till the mainstay of banks output for her customers.

Service is the act of distributing the banks various production packages and marketing strategies implementation. It is also the bulwark of the industry in the face of government guidelines and hash monetary or fiscal policies. This is viewed by (Oguntade, 1992) in Business Time that by aggressive marketing advertisement with the current Central Bank directives on deregulation of interest rate, banks must work extremely hard to be able to survive.

In Nigeria, the economy has been largely exhibitive of classic sellers’ market in all sectors. Till the recent past, the country is under banked and bank customers have to accept or consume service without questions as in every seller’s market. No wonder (Irojiogu, 1991) in his write-up of pricing of Commercial Bank services in Business Times pointed out that so many factors militate against rendering efficient banking services in Nigeria.

But today banking in Nigeria has become more competitive. (Riege, 1990) stated in Business Times that as an effort to improve and provide innovative services, banks especially commercial banks must step in line will present trend in the market, the customers who are the ultimate aim of the bank should be satisfied through deliverance of services that will satisfy the need of the customers, the bank make their profits. Considering this fact and also the view that human needs are instable, there is the need for this study to improve the service rendered to customers. The idea of efficient services in the banking industry has been given serious attention not only by the management of bank (UBA), but also by the government. The view is that commercial banks should provide prompt, friendly, covetous, orderly, efficient and satisfying services to her customer.

In view, of the foreign relationship between a bank and her customers is contractual. This is because baking is about trust. The customers entrust his hard-earned money with the bank for safekeeping. Here the bank is a debtor/agent and the customer is the creditor/principal since she (bank) carries out instruction of the customers in consideration for these services, the bank is paid commission, interest or fee.

In some situation, the bank is the creditor while the customer is the debtor. Such situation like advances or credit facilities to customers. Yet, many banks are known for their slow pace in transacting business. Long queues with customers waiting for towns to cash their cheque or deposit their money. To open an account is characterized by “come today, come tomorrow and next week syndrome. To buy a bank draft is another story. The Vanguard newspaper (11^th June, pg. 14) in the treat of WAEC registration, had a cartoon of an employee who was asking for two days casual leave to enable him purchase bank draft.

Another, a bank customer was carrying a mat to the bank so as to sleep while waiting for his turn in the crowded banking hall to cash his cheque, yet another, a bank customer was being turned around by bank staff in his quest for the section of foreign exchange for him to exchange his foreign currency.

According to Gadzama (1989) in his chairman’s statement of Allied Bank Annual Report “that customers are treated with lack of seriousness by bank staff. They believe it is right to deliberately delay customers as a result of their non-challant attitude to work. It is always a daily, occurrence to hear abuses flowing from customers to bank staff over a protracted delay in completing bank transactions.

1.2 BACKGROUND OF THE STUDY

No wonder the Chief of General staff late vice admiral Augustus Aikuomu stressed the point while addressing delegates in the 10^th Anniversary of the Nigerian Institute of Bankers. He said” rather one observe buoyant balance sheet which are not as a result of quality services, (emphasis mine) or growth stimulation, but a because to a drastic shift in asset portfolio, characterized by a more total avoidance of risk altogether”. That is why there must be need for reorientation in attitude of bank staff towards their customers. In the next decade, banking and nation economic activities will certainly become more complex and sophisticated.

In United Bank for Africa Plc, where the case study is based on the story is not different. A brief mention of the origin of the bank will be made. United Bank for Africa Plc, was originated from Britain and France, the British French Bank Limited itself, metamorphosed from Bruci Paris (Banque National Parle commerce et al, Industries) established in 1932. The officially opened to business in December 1949 with a staff strength of twelve.

In 1960, the went public in accordance with the policy and intention of the French owners of bank to sell off their shares to Nigerians on February 1961, the United Bank for Africa was incorporated to take over the assets and liabilities of the British for business under this new name on October 3^rd 1961. The also serve a good number of customer. But because the two parties (staff and customers) are not satisfied with each other, hence the study.

1.3 STATEMENT OF THE PROBLEMS

In the service ministry effectiveness of management is often by the quality of service rendered. There is in turn determined by the time spent to obtain the service and the circumstance in which it is received. Customers are satisfied when they get the services they want at the right time, right place, right price and in the right manner. As customers and users of bank directly or indirectly are aware of the various problems faced by customers.

It has been very difficult to understand the characteristics of the bank staff and customers.
Despite the enhanced status of the bank staff, it has been a problem to know the adequate of resources-human and material resources for effective operations.
Their had been complaint from the customers of non-satisfactory services.
More the extent of staff/customer relationship in United Bank for Africa Plc. Is not convincing.

1.4 OBJECTIVES OF THE STUDY

Bearing the stated problem in mind, this study will find a way of correcting the problems and to improve on them. The purpose of the study includes the following:-

To find out the characteristics of staff and customers of United Bank for Africa Plc.
To determine the extent of customers compliant of non-satisfactory services.
To evaluate the extent to which commercial banks have succeeded in dispensing their services to their customers.
To suggest avenues and method of improvement to the identified problems. And in so doing, to further give an insight into this sector of our economy for the future use of professionally qualified and skillfully trained personnel in furthering the staff-customer relationship.

1.5 SIGNIFICANCE OF THE STUDY

It has been said that the ultimate aim of any organization is to obtain success by way of achieving its objectives. An organization will go to any length by apply strategies that help them meet their target or achieve their goals. Considering the uniqueness of the problems identified in this research, the findings are expected satisfaction of customers’ needs through improved quality services.

The important of this study is to throw more light on some of the causes and effects of unsatisfactory counter services in the Nigerian banks which are the base of the current Nigerian banking system. The bank staff/management will also benefit from this study.

Furthermore, this study will go a long way by educating the commercial banks on how to dispense their services to their customers and also to help the average Nigerian bank customer to learn how to be patience in dealing with the bank staff and not always be in a hurry.

Finally, I hope that this work will provide basis for future research.

1.6 RESEARCH QUESTIONS

1. What are the characteristics of staff and customers of United Bank for Africa Plc?

2. How long have customers been complaining of non-satisfactory services?

3. Have the commercial banks succeeded in dispensing their services to their customers?

4. What are the avenues and methods of improvement to the identified problems?

1.7 RESEARCH HYPOTHESIS

Based on the problem statements, the research proceeds to formulate the following hypothesis, which will be tested in the course of the study.

H_o: There is no significant difference in the perception of customers and staff on whether the services received in the bank meets the needs and interest of the customers.

H_i: There is significant difference in the perception of customers and staff on the services received in the bank meets the needs and interest of the customers.

1.8 SCOPE OF THE STUDY

This study has been concentrated on United Bank for Africa Plc Abuja as represents the biggest branch of United Bank for Africa Plc Abuja.

A study about commercial banking would not be adequate without an analysis of impact of commercial banking on the development of the general economy. But the scope of activity would be practicably impossible within the available time, finance and also with respect to the Limited space for the study to cover whole branch of UBA.

Therefore, this study examines the causes of poor customer services and ways of improving it. Considering this factors, the data and response to questionnaires were limited to staff and customer of United Bank for Africa Abuja.

1.9 LIMITATION OF THE STUDY

Considering the factor made on the scope of this study of this chapter that is the constraints, notable among them were time and finance factor as the researcher was combining the research work and class work at the same period which are not easy. It is wise for Abuja to be used, which is a bonus area for getting the required data.

This study also was limited to Abuja with the hope that conclusions reached in the cause of the study should apply to other commercial banks.

1.10 DEFINITION OF TERMS

CUSTOMER: – According to Oxford Advanced Learners Dictionary of current English. Customer s defined as a person who buys things, especially one who gives his custom to a shop.
SERVICE: – This refers to a system or arrangement that supplies public needs especially for communication.
MANAGEMENT: – This refers to the body in an organization responsible for planning, organizing, directing and controlling activities in the organization.
RELATIONSHIP: -This means the connection between one thing, person, idea and another.
BANK: – Establishment for keeping money other valuables safety.
STAFF: – Group of assistants working together under a manager or head.
PERFORMANCE: Performance in this context entails how well or badly an individual/organisation does something or how well or badly something works.

REFERENCES

Gadzama M.W. (1989): Allied Bank Annual Report. Chairman statement P. 10.

Irojiogu .E. (1991) July 11: Business Times. Pricing of Commercial Bank service P.5.

Oguntade Adekunle .M. (1992): February 2 Strategic Issues Business Times, marketing of Bank Services P. 3.

Reige Ani (1990): The Alliance Silver Jubilee Edition Interview with Founding Chief Executives P. 15.

Thursday 19 January 2023

THE ROLE OF INFORMATION AND COMMUNICATION TECHNOLOGY (ICT) IN FRAUD DETECTION IN NIGERIAN BANKS

THE ROLE OF INFORMATION AND COMMUNICATION TECHNOLOGY (ICT) IN FRAUD DETECTION IN NIGERIAN BANKS

(A CASE STUDY OF FIRST BANK OF NIGERIA ENUGU)

ABSTRACT

This research work aims at determining the role of information and communication technology in detecting fraud in the Nigerian banking system. The banking institution which has integrity and trust as its hallmark has been exposed to various forms of fraud and various means employed in defrauding banks. Fraud derails the society’s integrity and value among the committee of nations and in effect, affects the level of trust. The banking sector has been the cornerstone of economic and financial mainstay of any nation, hence the need for study of the role and the effectiveness of information and communication technology in fraud detection in the banking industry. First Bank of Nigeria Pie, Enugu metropolis was used as a case study. The research work treated the causes of fraud in Nigerian banks, forms of bank frauds, Effects and consequences of fraud in first bank of Nigeria plc, the information and communication technology and fraud detection in banks and Fraud control measures in banks. The methodology adopted in this study is the survey research design there were interactions with bank staff of various cadres with structured questionnaire to know their own opinion. 400 questionnaires were administered of which 320 were duly completed and returned. Some of the findings from the research work reveal that lack of staff motivation has an effect on the incidence of fraud in Nigerian banks. It also reveals that the introduction of ICT into the banking industry has reduced the incidence of fraud in Nigerian banks. Further findings reveal that the Nigerian banking laws are not adequate for fraud control in banks. Based on the findings of this study, recommendations made are the adoption of computer aids as tool for fraud prevention and control; banks should employ highly sophisticated security gadgets in their banks, like surveillance TV systems, on —the-spot photographing of customers etc. Proper reviewing of laws relating to fraud should be encouraged and stern penalties that commensurate with any offence committed should be embarked on.

CHAPTER ONE

1.1 BACKGROUND OF STUDY

Today’s business environment is very dynamic and undergoes rapid changes as a result of technological innovation, increased awareness and demands from customers. Business organisations, especially the banking industry of the 21st century operates in a complex and competitive environment characterized by these changing conditions and highly unpredictable economic climate. Information and Communication Technology(ICT) is at the centre of this global change curve. Laudon and Laudon, (1991) contend that managers cannot ignore Information Systems because they play a critical role in contemporary organization as it regards fraud detection in Nigerian banks.

Fraud is a global phenomenon,it is not unique in any sector of the economy or peculiar to Nigeria. The level of fraud in the present day Nigeria has assumed an epidemic dimension. It has eaten deep into every aspect of our life to the extent that a three year old child talks about yahoo mail or 419, newly discovered sobriquet for advanced free fraud that is hunting us as a nation. Nigeria, with all of its natural and human resources, tethers on the brink of destruction because of fraud. Much of what we do is “cutting leaves” instead of dealing with the root problem. Generally, fraud takes its root from the human heart. It is an axiom that the heart is deceitful above all things and is desperately wicked.

Fraud is the number one enemy of the business world, no company is immune to it and it is in all works of life, it is becoming predominant in the banking industry, as banks are now persistent targets of frauds. Nwankwo (1991)said that there is no where fraud is more serious than in banking. It is the biggest cause of bank failure. The fear is now rife that the increasing wave of fraud in the financial institutions in recent years, if not arrested might pose certain threats to stability and the survival of individual financial institution and the performance of the industry as a whole and no area of the economy is immune from fraudsters and even the banking system. Fraud if not checked might cause run on in the banking sector.

Fraud together with its sister white-collar crimes which came into being later in the 19th and 20th century interalia corruption, money laundering, tax evasion,externalization of foreign currency to itemize just a few have stood as potent weapons capable of hemorrhaging the entire world economies particularly the banking sector because of its high risk factor.Since fraud is carried out over a period of time, a minor one at the initial stage snowballs into a sizeable one over a period of time. However, the incidence of fraud has become a nightmare to the bankers who are particularly concerned,not only because it is on the increase, but also it acquires sophistication and tries outwitting every new technology. In the past years, cases of frauds in banks have been on the increase with each year recording staggering figures, even though most of the reported cases are essentially different types of fraud, An example is defrauding a bank using a genuine account of an employee who is the defrauder.Another one is through the use of fictitious account; also, fraud is carried out with the aid of an employee’s friend. Similarly this unholy act is sometimes done usingan account of a third party that depends on an employee-insider to perpetrate the act.

Fraud is a universal phenomenon which has been in existence for so long. Its magnitude cannot the security team designed to prevent it. Its management has become a central point in banking like the management of risk because of the above facts. Fraud and its management have been the precipitating factor in the distress of banks, and as much as various measures have been taken to minimize the incidence of fraud, it still rises by the day because fraudsters always device tactical ways of committing fraud. This has become a point of great attention in the banking sector as well as every organization in Nigeria.

Technology is invented by man to manipulate his social and physical environments. The sociology of science and technology made us to understand that, technology came with both manifest and latent intents. The manipulation of computer and other information and communication technology (ICT) to detect fraud in banks gives more insight into the manifest function of technological revolution. When computer was invented, the intention of its inventors is to hasten data processing with effortless ease. That it has been doing efficiently by giving timely and accurate information. The ability of computer to control manipulations,frauds, and forgeries continue to give the banking system the urge to upgrade their information communication technology (ICT) department. If not for the introduction of information communication technology system in Nigeria, fraud could have defeated the Nigeria banking industry. In this view, despite the introduction of the first banking ordinance in 1952 and central bank act in 1958including acts and ordinance with the amendments over the years to control and regulate the activities of the banks, fraud rather increased in size and thetechniques gained more sophistication.

The introductions of modern banking methods like automatic electronic gadgets;communication systems and computers; fraud has a watchdog to check its excesses. Due to forgery in cheques, bankers are extremely carefully when clearing them, and most times the forged cheques look authentic and the owner will have to confirm the signature on the cheque as his own. It is against this backdrop that this study seeks to evaluate the role of information and communication technology in Nigerian banks with special reference to First Bank of Nigeria plc.

1.2 STATEMENT OF THE PROBLEM

The enormity of bank frauds in Nigeria can be inferred from its value,volume and actual loss. A good number of banks’ frauds never get reported to the appropriate authorities, rather they are suppressed partly because of the personalities involved or because of concern over the negative image effect that disclosure may cause if information is leaked to the ban1cin’ public. The banks’ customers may lose confidence in the bank and this could cause a setback in the growth of the bank in particular.

Fraud leads to loss of money, which belong to either the bank or customers.Such losses may be absorbed by the profits for the affected trading period and this consequently reduces the amount of profit, which would have been available for distribution to shareholders. Losses from fraud which are absorbed to equity capital f the bank impairs the bank’s financial health and constraints its ability to extend loans and advances for profitable operations. In extreme cases rampant and large incidents of fraud could lead to a bank’s failure.

Fraud can increase the operating cost of a bank because of the added cost of installing the necessary machinery for its prevention, detection and protection of assets. Moreover, devoting valuable time to safeguarding its asset from fraudulent men distracts management. Overall, this unproductive diversion of resources always reduces outputs and low profits which in turn could retard the growth of the bank. It also leads to a diminishing effect on the asset quality of banks. This work therefore tends to look into how the Nigerian banks can use information and communication technology (ICT) to detect and minimize fraud.

1.3 OBJECTIVES OF THE STUDY

The main aim of this study is to find a practical means of detecting the incidences of fraud in Nigeria banks with the aid of information and communication technology. While specific objectives are:

To investigate whether the introduction of information and communication technology into the banking industry reduced the incidence of fraud.
To ascertain if lack of motivation contributes to incidence of fraud in FBN in particular.

1.3 RESEARCH QUESTIONS

How has the introduction of ICT into the banking industry reduced the incidence of fraud?
Has the introduction of information technology into the banking system reduced fraud in First bank?

1.5 HYPOTHESIS OF THE STUDY

Ho: the introduction of ICT into the banking industry reduced the incidence of fraud in Nigerian banks
Ho: the introduction of ICT into the banking industry reduce the incidence of fraud in First bank in particular

1.6 SCOPE OF THE STUDY

The research covers the First bank of Nigeria plc within the Enugu metropolis. The information used for the analysis covers the five years period between 2014 and 2018.In order to attain the objectives of this research, the scope of the study is defined to involve all relevant aspect of fraud in First bank operations. Information is obtained on the number of fraud cases perpetrated in First bank and their frequency, the effect it has on the bank, the persons involved,and causes of fraud and the level of effectiveness of the information and communication technology employed.

1.7 LIMITATIONS OF THE STUDY

The main limitations of the study are the uncooperative attitude of some staff of the bank taken into study, inadequacy of time and financial constraints.Some of those approached for information declined and refused to cooperate. This affected the volume of information available for the study. Again, limited time allocated for this research work did not provide room for accuracy and reliability of results.

1.8 SIGNIFICANCE OF THE STUDY

This study can be of importance to the banking industry at large, particularly the first bank of Nigeria because it will expose the fraud perpetuators which will be of interest to the management. It is also prepared for those who may be interested or willing in carrying out further investigation on fraud detection with special reference to first bank of Nigeria. It will throw more light on ways by which fraud can be detected and minimized with the aid of ICT the study will serve as a body of knowledge to be referred to by researchers.

1.9 DEFINITION OF TERMS

Bank: Section 41 of Nigerian banking act of 1969 defined a bank as an institution that carries on banking business and includes a commercial bank an acceptance house, discount house, financial institution and merchant bank.

Banking: the section defined banking as the business of receiving money from outside source as deposits perspective of the payment of interest or the granting of bills and cheques or the purchase and sale of securities for account of other or the incurring of the obligation to acquire claims in respect of loan prior to their maturity.

FRAUD: The act of depriving a person dishonestly of something which is his or of something to which he is or would or might be entitled, but for the perpetration of fraud.

BANK: Refers to a person or company carrying on the business of receiving money and collection of drafts from customers subject to their obligation of honouring cheques drawn upon them from time to time by the customers to the extent of the amount available in their current account.

THE ROLE OF INFORMATION AND COMMUNICATION TECHNOLOGY (ICT) IN FRAUD DETECTION IN NIGERIAN BANKS

(A CASE STUDY OF FIRST BANK OF NIGERIA ENUGU)

ABSTRACT

CHAPTER ONE

1.1 BACKGROUND OF STUDY

1.2 STATEMENT OF THE PROBLEM

1.3 OBJECTIVES OF THE STUDY

The main aim of this study is to find a practical means of detecting the incidences of fraud in Nigeria banks with the aid of information and communication technology. While specific objectives are:

To investigate whether the introduction of information and communication technology into the banking industry reduced the incidence of fraud.
To ascertain if lack of motivation contributes to incidence of fraud in FBN in particular.

1.3 RESEARCH QUESTIONS

How has the introduction of ICT into the banking industry reduced the incidence of fraud?
Has the introduction of information technology into the banking system reduced fraud in First bank?

1.5 HYPOTHESIS OF THE STUDY

Ho: the introduction of ICT into the banking industry reduced the incidence of fraud in Nigerian banks
Ho: the introduction of ICT into the banking industry reduce the incidence of fraud in First bank in particular

1.6 SCOPE OF THE STUDY

1.7 LIMITATIONS OF THE STUDY

1.8 SIGNIFICANCE OF THE STUDY

1.9 DEFINITION OF TERMS

FRAUD: The act of depriving a person dishonestly of something which is his or of something to which he is or would or might be entitled, but for the perpetration of fraud.