The Impact of Internet Banking on Bank Fraud in Nigeria

Abstract

This study investigated the effect of internet banking on bank fraud in Nigeria. Monthly data covering from January 2008 to January 2019 representing 97 observations were utilized. The Auto Regressive Distributed Lag (ARDL) technique was used as the technique of data analysis. The independent variable is internet banking while the dependent variable is bank fraud. The control variables included measures of regulatory quality, bank development and capital market development which have strong correlation with the level of bank fraud in a financial system. Identity theft theory & software vulnerability theory were the theoretical underpinnings in this work. The findings of the study reveal overwhelming evidence of a positive interaction between internet banking and bank fraud in Nigeria which could be attributed to the regulatory quality of the Nigerian banking industry. Internet based transactions had a positive and significant effect on bank fraud in Nigeria Some of the recommendations emanating from the findings of the study are; mainstreaming regulatory sandbox, promoting favorable macroeconomic environment, strengthen AML/CFT regime, strict adherence to fraud disruption measure, biometric authentication, harmonization of industry standards, consumer education awareness.