Fraud in the Banking Industry, a Case Study of Ethiopia
No Thumbnail Available
Date
2022-11-02
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
A.A.U
Abstract
This study aimed to evaluate banking fraud in the banking sector in Ethiopia. The study's goals
were to identify the most common fraud types, their root causes, and how fraud affects banks'
financial health. The study used a descriptive research design using 18 banks out of 28 banks as
the case. Using simple random sampling technique, 84 employees, who represented 107 of the
populations, and, 3 employees from NBE by purposive sampling, were included in the sample
size. SPSS version 25 was used to determine the percentage and frequency of the data obtained.
The research revealed that fraudulent money transfers, unauthorized withdrawals, theft and
embezzlement, account opening fraud, money laundering, loan document falsification,
unauthorized use of debit cards (ATM), and finally terrorist financing are the primary types of
fraud that predominantly occur. Other than these, the main variables that contribute to fraud
include shifting societal norms, economic pressure, a lack of training, increasingly complex
crimes, socio cultural elements including ethics, crime rates, education, unemployment, and
political elements. Finally, the study draws the conclusion that fraud has a significant negative
impact on Ethiopian banks' financial performance, whether directly or indirectly. Based on the
findings, the study suggests, among other things, that Ethiopian banks develop and implement
efficient management quality, the regulatory and supervisory organizations of banks in Ethiopia
must strengthen their supervision, the management needs updated technology, staff training, the
personnel should have had a thorough background check before being hired, The private and
governments bank should work together by developing a centralized fraud controlling
mechanisms, that would reduce the incidence of fraud and fraudulent practices in the country’s
banking sector.