Banking and Finance Project Topics

Financial and Economic Crimes, Its Implications for Banking Industry and Nigeria Economy

Financial and Economic Crimes, Its Implications for Banking Industry and Nigeria Economy

Financial and Economic Crimes, Its Implications for Banking Industry and Nigeria Economy

Table of Contents
Title Page
Chapter One
1.0 Introduction
1.1 Background Information to the Study
1.2 Statement of Problem
1.3 Objectives of the Study
1.4 Research Questions
1.5 Statement of Research Hypotheses
Chapter Two
2.0 Literature Review
2.1 Overview of Fraud and Related Financial Crimes
2.2 the Impact of Fraud and Financial Crimes on Economic Growth and Development
2.3 Financial Fraud in Government and Organization
Chapter Three
3.0 Methodology
Chapter Four
4.1 Data Presentation and Analysis
Chapter Five
5.0 Conclusion and Recommendation
5.1 Conclusion
5.2 Recommendations



The main objective is to determine the impact of fraud and financial crimes on the growth and development of Nigerian economy. The specific objectives include the following:-

  1. To examine the effect of fraud and related financial crime on Gross Domestic Product.
  2. To examine the effect of fraud and related financial crime on inflation in the economy.


  1. To what extent do fraud and related financial crime affect Gross Domestic Product?
  2. To what extent do fraud and related financial crime affect inflation in the economy?





Black (1979) defines fraud as all multifarious means which human ingenuity can devise, and which are resorted to by one individual to get an advantage over another by false suggestions or suppression of the truth. It includes all surprises, tricks, cunning or dissembling, and any unfair way which another is cheated. Under common law, three elements are required to prove fraud; a material false statement made with intent to deceive (scanter), a victim’s reliance on the statement and damages.

The criminal code section 380 sub-section one stated that everyone who, by deceit, falsehood or other fraudulent means, whether or not it is a false pretence with the meaning of this Act, defrauds the public or any person, whether ascertained or not, of any property, money or valuable security or any service. This means that fraud is criminal deception intended to financially benefit the deceiver.

Edelherz-et al (1977) defines fraud as an illegal act or series of illegal acts committed by non­physical means and by concealment or guide to obtain money or property, to avoid the payment or loss of money or property, or to obtain business or personal advantage. Also Webster’s collegiate dictionary of current English defines fraud as deceit, trickery, specifically; intentionally pervasion of truth in order to induce another to part with something of value or to surrender a legal right. Fraud is a feature of every organized culture in the world. It is a significant and growing threat to organizations. Regardless of its size, location of industry (Golden, Skalak, & Clayton, 2006). Fraud is an activity that takes place in a social setting and has severe social consequences for the economy, corporation, and individuals.

Sociologists are of the opinion that some middle-range theories of fraud in Nigeria include family members-Nuclear, relative, patterns of friendship and social networks made up of friends and friends of members of social systems to which a particular individual belongs. The cultural transmission theory formulated by Sutherland (1949) holds that deviant behaviour, like non-deviant behaviour, and the norms of conduct and cultural belief are products of society, that are learnt by people as members of a society or social groups in the society. With specific reference to the violations of criminal law, the theory holds that a person becomes criminal if he is exposedmore frequently and for a prolonged period of time to expressions of views and attitudes favourable to criminal activities than views and attitudes unfavourable to such activities.

Interaction process theory of deviant behaviour or trust violation involves a non-sharable financial problem; knowledge of how to violate; and rationalizations about the violations. Non-sharable financial problems include business failure through an unsuccessful gamble or speculation and important socio obligations such as emergency expenditure which involve the persons social status. Those who violate trust believe that they can resolve these problems secretly by violating their positions of trust, and they are confident that they have the knowledge of the technique to do so. They rationalize their behaviour not as trust violation but they were “only borrowing” and hope to pay back but something then happens which makes it impossible for them to refund what they were only borrowing. Trust violations are usually put in the position they violate precisely and they were regarded as trustworthy with other people’s money or property. The classic application of the interaction process theory of deviant behaviour is that by Gressey (1959). The study which the author believes to be a universal explanation of trust violation by individuals entrusted with funds or property has underlined three essential elements of trust violation i.e pressure, opportunity and rationalization (Merton, 1957). The three elements can be further explained thus: (i) The modes-conformist or deviant – with which the members of the different strata in the society adapt to the anomies or normless situation; (ii) the variation in the rates at which the members of different strata choose different modes of adaptation.




The study adopts the historical research method in an attempt to determine the effect of fraud and related crimes on the Nigerian economy. The purpose of historical research is to obtain a better understanding of the present through the evaluation of the past and intelligent prediction of the future (Adefila, 2008). The study purely used secondary data for the analysis. The use of secondary data only is because; information relating to the study is readily available from various publications. The analytical tool adopted by the researcher in analyzing the data collected for the study was the Regression Analysis.



The table shows the data on fraud involvement in Nigeria from 2007 to 2011 and the gross domestic product (GDP) covering the same period. This is for the purpose of testing hypothesis I to determine the effect of fraud and financial crime on the economy of Nigeria. The table also shows the data on inflation and the gross domestic product (GDP) from 2007 to 2011. This is for the purpose of testing hypothesis II to determine the effect of inflation on the economy.





The impact of fraud and financial related crimes on the Nigerian economy are enormous when we consider the high rate of crimes and the amount involved especially on the area of advance fee

fraud or 419 or Nigeria letter. Fraudulent practices and financial related crimes have portrayed Nigeria in bad light and as such foreign investors are skeptical in doing business in our country. The research therefore concludes as follows:

  • Fraud and related financial crime has significant effect on Gross Domestic
    Product thereby affecting the Nigerian Economy.

(ii)       Fraud and related financial crime has no significant effect on inflation. However, it has contributed in affecting the economy in a negative way.


The researcher was disposed to make the following recommendations based on the findings and conclusions:

Fraud Detection and Prevention Measures: It was recommended that Auditors and Accountants in organizations and financial institutions should be trained on how to carry out forensic investigation since the fraudsters are now sophisticated in their act. Also internal control systems should be strengthened to block opportunities that attract fraud perpetrators.

Fight Against Corruption: Corruption has become a way of life in Nigeria since authorities no longer frown at it because chief cronies are involved. Despite various agencies and commissions established to fight corruption and crimes in the country, the crime rate especially financial related crimes are on the increase hence the researcher suggested that government should be serious in the fight against corruption. Recently a chieftain of PDP that was jailed for corruption was released after completing his jail term, but surprise he was received by statesmen and government officials in a well celebrated reception. This type of attitude does not portray the government in good light before the international community; hence, anti-corruption agencies should improve on their strategies in fighting corruption and fraud so as to reduce the negative effect of fraud on the Nigeria economy.



  • Akpa, A. (2009) Impact of the Financial Meltdown on the Nigeria Economy” unpublished paper. Andoh, K. (2004) “Criminology and Code of Professional Ethics” A paper delivered during workshop on fraud and related Financial Crimes at Rapour Hotels, Owerri, November 24 to 26.
  • Babalola, R. (2010), Nigeria: Excess Crude Account to Drop to N528.4 billion, This Day newspaper, May 25. Black, H.C. (1979), Blacks law Dictionary, 5 th edition, St. Paul Minnesota, West Publishing Co.
  • Cendrowski et al, (2008) The Handbook of Fraud Deterrence (Retrieved from deterrence). Constitution of Federal Republic of Nigeria, 1999.
  • Daniel, G.I. (1999) Public Sector Accounting, Zaria, Ahmadu Bello University Press. Golden, T.W.,
  • Skalak, S, Clayton, M. (2006). A Guide to Forensic Accounting Investigation, New York: McGraw-Hill.
  • Ladan, M.T. (2005) Crime Prevention and Control and Human Rights in Nigeria, Zaria, ECONET Publishers.