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Fraud and Bank Performance in Nigeria – Var Granger Causality Analysis

Author

Listed:
  • 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)

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.

Suggested Citation

  • Muritala Taiwo A. & Ijaiya Muftau A. & Afolabi Olatanwa H. & Yinus Abdulrasheed B., 2020. "Fraud and Bank Performance in Nigeria – Var Granger Causality Analysis," Financial Internet Quarterly (formerly e-Finanse), Sciendo, vol. 16(1), pages 20-26, March.
    • Handle: RePEc:vrs:finiqu:v:16:y:2020:i:1:p:20-26:n:2
    DOI: 10.2478/fiqf-2020-0003
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    Keywords

    Granger Causality; Fraud; Bank Performance; NDIC; Nigeria;
    All these keywords.

    JEL classification:

    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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