Effects of Fraud on Bank Performance in Ethiopian Commercial Banks
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Date
2021-04
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A.A.U
Abstract
Bank fraud in Ethiopia has increased in alarming rate. According to 2018 and 2019 annual report of federal police crime Investigations bureau, Ethiopian banks lost 326,343,280 birr over the last two years. The aim of the study is to assess the effects of fraud on bank performance in Ethiopia commercial banks. This study used explanatory research design. The population of interest in this study was the commercial banks which are operate in Ethiopia. The study sampled 9 commercial banks out of the 18 banks. The selection of the respondents was done through a stratified random sampling technique. The total number of the sample was 120 respondents drawn from; Management, tellers, loan’s department, accounts opening department and Customer Care. Both Primary and secondary data was collected for the study. Primary data was gathered through questionnaire. The Secondary data was collected from annual report of national bank of Ethiopia and selected commercial banks. Multiple Regression analysis model was used to assess the impact of independent variables on the dependent variable. The study revealed that management causes of fraud, technological causes of fraud, legal cause of frauds and personal causes of fraud are influencing the performance of Ethiopian commercial banks. The study therefore concludes that fraud influences the financial performance of in Ethiopian commercial banks. This paper recommends that commercial banks in Ethiopia must apply good financial governance control measures that help to discover fraud and supervise all the transactions that are considered vulnerable to fraud.
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Keywords
Commercial Bank, Frauds, performance of commercial banks, Causes of fraud