ALTERNATIVE BANKING CHANNELS AND FINANCIAL FRAUD IN NIGERIA

ABSTRACT

The study empirically examined the relationship between alternative banking channels and financial fraud in the Nigerian banking industry. The rationale for this study was based on the fact that fraud or fraudulent practices are one of the banes of the performance of the Nigerian banking industry. Many unsuspecting Nigerians have fallen victim and have been defrauded by several millions of Naira. The study employed the cointegration econometric technique on quarterly data sourced from the Central Bank of Nigeria Statistical Bulletin and annual reports of Nigeria Deposit Insurance Corporation (NDIC) covering 9 financial years (2009Q1 to 2017Q4). The results from the analysis indicate that web internet has a significant negative relationship with financial fraud in Nigeria in both the short and long-run; mobile payment is a significant determinant of the level of financial fraud in Nigeria; automated teller machine and Nigerian electronic funds transfer failed the 5% level of significance in both short and long-run. Point of sale terminals (POS) passed the 5 percent significance level test in both the short and long-run. This means that POS terminalusage is a strong determinant of financial fraud in Nigeria both in the short run and in the long run. The study recommends among others that, appropriate policies aimed at devising measures for curbing or checkmating associated fraud in the use of these two variables (web internet and mobile payment) and, ensuring banks’ financial performance in Nigeria must not be overlooked by CBN and other relevant regulatory agencies. Also, since the Nigerian electronic funds transfer (NEFT) is not a significant threat to fraud in the Nigerian banking sector, it, therefore, follows that the government, banks’ management, and regulatory authority should not relax in their current policy effort on electronic funds transfer (NEFT). Rather, they should strengthen it to continuously ensure fraud-free electronic funds transfer in Nigeria. This will go a long way to boost customers’ confidence in the usage of this channel for business transactions and turn, improve the overall financial performance of banks in Nigeria.