Abstract

This study investigated the relationship between bank fraud and the performance of Deposit Money Banks (DMBs) in Nigeria. Expected loss from fraud, number of fraud cases, number of staff involved and volume of fraud involved (proxy for bank fraud) were regressed against earnings before tax (proxy for performance of DMBs). Secondary data on the indicators of bank fraud were collected from the Central Bank of Nigeria (CBN) annual reports and Statistical Bulletin for the period 1991–2012. The study employed Ordinary Least Square (OLS) method of econometrics technique, unit root tests, co-integration and error correction mechanism using E-view Version 7.1 Software, to analyse data on the variables. The findings revealed that bank fraud has a significant inverse relationship with bank performance. The study therefore recommended that regulatory authorities and bank management should put policies and measures in place to curtail the incidence of bank fraud to avoid systematic distress and the collapse of the entire banking system in Nigeria.