Loan Fraud Detection And IT-Based Combat Strategies

Ifeyinwa Ajah () and Chibueze Inyiama ()
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Ifeyinwa Ajah: Ebonyi State University
Chibueze Inyiama: Nnamdi Azikiwe Federal University

Journal of Internet Banking and Commerce, 2011, vol. 16, issue 2, 01-13

Abstract: Loan portfolio problems have historically been the major cause of bank losses because of inherent risk of possible loan losses (credit risk). The study of Bank Loan Fraud Detection and IT-Based Combat Strategies in Nigeria which focused on analyzing the loan assessment system was carried out purposely to overcome the challenges of high incidence of Non- Performing Loan (NPL) that are currently being experienced as a result of lack of good decision making mechanisms in disbursing loans. NPL has led to failures of some banks in the past, contributed to shareholders losing their investment in the banks and inaccessibility of bank loans to the public. Information Technology (IT) is a critical component in creating value in banking industries. It provides decision makers with an efficient means to store, calculate, and report information about risk, profitability, collateral analysis, and precedent conditions for loan. This results in a quicker response for client and efficient identification of appropriate risk controls to enable the financial institution realize a profit. In this paper we discussed the values of various applications of information technology in mitigating the problems of loan fraud in Nigeria financial Institutions.

Keywords: Information sharing; Artificial Neural Networks (ANN); Credit Scoring (CS); Biometrics; Intelligent Agents; Global Positioning System (GPS); Digital Nervous System (DNS); Research study; Nigeria (search for similar items in EconPapers)
JEL-codes: H81 (search for similar items in EconPapers)
Date: 2011
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