Effect of Electronic Banking Related Fraud on Deposit Money Banks Financial Performance in Nigeria

This study empirically ascertained the effect of electronic banking related fraud on deposit money banks financial performance in Nigeria. Empirical studies relating electronic banking and banks performance in Nigeria has been centred on its benefit of improving profitability of deposit money banks while the effect of fraud perpetrated on electronic banking platforms used by banks operating in the economy are often neglected. Specifically, we examined the effect of electronic banking related fraud on automated teller machines, mobile banking, point of sale terminals and web to return on assets, return on equity, interest income and non-interest income of deposit money banks. Comprehensive data on fraud on the various electronic banking channels from the apex regulatory agency of the banking system: Central Bank of Nigeria began in 2013 thus limiting the study to a period of four years. The Ordinary Least Square (OLS) was applied in estimating the regression equation, whereas effect of fraud on various channels of electronic banking and financial performance ascertained with the help of the granger causality analysis. The findings from the study dispelled that fraud on point of sale terminals has significant negative effect on interest income, while fraud on automated teller machines, mobile banking and web had no effect on return on assets, return on equity and non-interest income of banks. we suggested that there is need for deposit money banks to further authenticate transactions on point of sale terminal by sending confirmation code to mobile number linked to the account to affirm that the transaction was initiated the original cardholder