Analysing the impact of fraud on bank performance. A Survey of commercial banks in Bindura.

Abstract

The general increase of internal bank frauds in Zimbabwe surpasses the existence of control measure in the banks and it has led many questions to be raised regarding the capacity of the banks in combating internal bank fraud. This study aimed at assessing the impacts of fraud on the bank performance in Bindura Central Business District banks, to identify types and the nature of the bank frauds in Bindura CBD, to identify the causes, to identify the causes of bank frauds and lastly to establish strategies to curb internal bank fraud. The targeted population was commercial banks in Bindura CBD. The researcher employed convenient sampling technique in coming up with a sample. A sample of three commercial banks was identified with thirty-one respondents. A descriptive research design was employed as well as questionnaires and interviews in order to gather data. The collected data was analysed using a Scientific Package for Social Sciences (SPSS) and Microsoft Excel package in presentation of data. The study found out that internal bank frauds that were prevalent in Bindura CBD banking sector were computer frauds, wire fraud, accounting fraud, theft and embezzlement, forgeries and manipulation of vouchers while rogue’ s traders and forged or fraudulent cheques were not prevalent. The study also revealed that internal bank frauds were caused by a combination of both environmental and institutional factors. The study further established the impacts of fraud on bank performance as the following; loss in shareholder’s value, loss of business reputation, loss of clients and increase in operational expenses. In addition, the study found out that elements of Committee of Sponsoring Organizations COSO fraud control model are useful in controlling internal bank frauds. The study concluded that fraud has caused banks to perform at low capacity and as such banks are channelling some of their finances towards improving security measures. The study recommended enforcement of internal controls, screening on bank staff, and training of bank staff on fraud causatives and management and adoption of thorough corporate governance by top management of the banks as possible measures to address bank frauds.