Effect of Bank Fraud Control Measures on the Profitability of Deposit Money Banks in Nigeria.

Abstract:

The study examined the effect of bank frauds control measures on deposit money banks’ profitability in Nigeria spanning a period of 24 years from 2000 to 2023. The data were sourced from secondary sources which included Nigeria Deposit Insurance Corporation (NDIC) publications and the Worldwide Governance Indicators data for Nigeria. Whereas deposit money banks profitability (proxy by banks return on assets – ROA) served as the dependent variable, total bank fraud (TBF), regulatory oversight (RO) and internal control (IC) served as the explanatory variables. The Augmented Dickey Fuller (ADF) test was used to ascertain the stationarity of this model, which proved to be of mixed order. The ARDL co-integration bounds test was further employed to ascertain the long run relationship test of the variables. The result showed that there was presence of co-integration, hence establishing a long run relationship between bank fraud control measures and deposit money banks’ profitability. The results of Auto-regressive Distributed Lag (ARDL) estimate showed that the explanatory variables have a negative and insignificant relationship with deposit money banks’ profitability. It is recommended that bank fraud detection measures, regulatory oversight and internal control mechanisms should be strengthened.