Fraud and Bank Performance in Nigeria – Var Granger Causality Analysis

Muritala Taiwo A. (), Ijaiya Muftau A., Afolabi Olatanwa H. and Yinus Abdulrasheed B.
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Muritala Taiwo A.: Department of Accounting and Finance, Fountain University Osogbo, Osun State, Nigeria
Ijaiya Muftau A.: Department of Finance, University of Ilorin, Kwara State, Nigeria
Afolabi Olatanwa H.: Department of Accounting & Finance, Al-Hikmah University Ilorin, Kwara State, Nigeria
Yinus Abdulrasheed B.: Department of Accounting, University of Ilorin, Kwara State, Nigeria

Financial Internet Quarterly (formerly e-Finanse), 2020, vol. 16, issue 1, 20-26

Abstract: This paper examines the causality between fraud and bank performance in Nigeria over the period 2000-2016 for quarterly financial data using Johansen’s Multivariate Cointegration Model and Vector Autoregressive (VAR) Granger Causality analysis. The results show a long-run relationship between the variables. Bank performance was found to be linked to Granger fraud variables and vice versa at 10% significant level. This study reveals that there was a direct causal relationship between bank performance and fraud because increase in fraudulent activities in the banking sector leads to reduction in bank performance. Hence, this study recommends that internal control systems of banks should be strengthened so as to detect and prevent fraud. In this way, bank assets would be protected.

Keywords: Granger Causality; Fraud; Bank Performance; NDIC; Nigeria (search for similar items in EconPapers)
JEL-codes: C01 G21 G30 G34 O55 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:finiqu:v:16:y:2020:i:1:p:20-26:n:2

DOI: 10.2478/fiqf-2020-0003

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