Electronic Banking Fraud and Financial Performance of Quoted Banks in Nigeria

Electronic banking has boosted financial inclusion in Nigeria as well as exposure to electronic fraud. This paper analysed how electronic banking fraud, in terms of Automated Teller Machine (ATM) fraud, Point of Sales (POS) fraud, Mobile Payment (MOP) fraud, and Web Pay (WEP) fraud, has impacted the financial performance of banks, in the form of net interest margin (NIM). The study was based on the Fraud Triangle Theory, Agency Theory, and Information Asymmetry Theory and a design was ex post facto with the positivist research philosophy. The Central Bank of Nigeria (CBN) and Nigeria Inter-Bank Settlement System (NIBSS) provided secondary data that were used during the study (2010-2023). Ordinary Least Squares (OLS) regression method was used with a significance amount of 5%. The results indicated that ATM, POS, and MOP fraud had negative but statistically non-significant impacts on NIM whereas WEP fraud had positive and significant impacts, which indicate that the increase of web-based transactions can increase bank profitability despite its risks. The R2 (0.906) of the model showed that the model has a strong explanatory power, and the F-statistic proved that the overall significance is significant. The paper concludes that electronic fraud has varied impacts on financial performance to different channels of transactions. It recommended for the implementation of AI-based fraud detection systems, improved internal controls, and regulation cooperation to reduce risks. The research makes a contribution to the knowledge because it combines various financial theories and gives empirical findings about the diversified impacts of different types of e-fraud on the performance of banks in Nigeria.