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The impact of monetary policy on the liquidity of commercial banks. 

Abstract

The study emphasized on the relevance of the banking industry and development and explores economic growth and the structural change in monetary policy in Nigeria. The first chapter trace the introduction of the liquidity position of commercial bank’s its effectiveness in monetary policy was identified. These include the inadequacy of the banking industry itself. Conflicts of monetary objectives and targets and the Nigerian economy witnessed both monetary stability and economic property. This was also further discussed broadly in chapter two including the factors that are containing monetary policy in Nigeria. The data for the study were collected by the use of personal interviews the data collected were tabled down, discussed and analyzed using sample parentage. Based on the findings it was discovered that the federal government as the central bank of Nigeria (CBN) has implemented a new monetary policy on all banks that cannot meet the CBN requirement which is 25 billion naira implemented. These factors have the role in the developing economy like Nigeria as a result of the following reasons (1). Poor banking habits. (2). Policy asymmetry (3).Inadequate securities (4).Lagged response. These also led to the problem of monetary policy management in Nigeria. This can be summarized as follows: (1). The issue of money outside the banking system (2). The role of the banking industry (3) The problem of the lingering distress in the banking industry. 

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SettingsThe impact of monetary policy on the liquidity of commercial banks removeTHE ROLE OF THE FINANCIAL INVESTORS IN HOUSING PROVISIONING IN NIGERIA removeCritical review of the effect of global financial crisis on mortgage financing in Nigeria removeTHE INFLUENCE OF RELATIONSHIP MARKETING ON CUSTOMERS PATRONAGE OF UNION BANK PLC, MAKURDI removeTHE IMPACT OF FORENSIC AUDIT SERVICES ON FRAUD DETECTION AMONG COMMERCIAL BANKS IN NIGERIA removeRisk management and bank profitability in Nigeria remove
NameThe impact of monetary policy on the liquidity of commercial banks removeTHE ROLE OF THE FINANCIAL INVESTORS IN HOUSING PROVISIONING IN NIGERIA removeCritical review of the effect of global financial crisis on mortgage financing in Nigeria removeTHE INFLUENCE OF RELATIONSHIP MARKETING ON CUSTOMERS PATRONAGE OF UNION BANK PLC, MAKURDI removeTHE IMPACT OF FORENSIC AUDIT SERVICES ON FRAUD DETECTION AMONG COMMERCIAL BANKS IN NIGERIA removeRisk management and bank profitability in Nigeria remove
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DescriptionABSTRACT This study is on the role of the financial investors in housing provisioning in Nigeria. Housing plays a key role in the socio-economic development of every country but unfortunately, housing supply worldwide has not been able to meet demand. The inadequate housing is one of the biggest challenges facing both developed and developing countries today with finance being a crucial factor. The financial Investors is the  largest  housing  supply system  but  has  not  been  able  to  meet  the  increasing demand partly as a result of the inadequate and ineffective financial mechanisms for financing housing in the country. The study therefore investigated the major finance mechanisms used by the financial Investors and factors which hinder their access to formal credit facilities. It also made suggestions to improve access to credit facilities to the financial Investors to improve housing delivery. A cross-sectional research design was adopted as a research approach for the study. The simple random sampling was used to select the ten communities whilst the convenience  sampling  method  was  used  to  select  the  homeowners.  In  order  to increase  the  accuracy  of  the  work,  the  research  was  operated  at  a  95  percent confidence level with a 5 percent margin of error. A total of 310 interviews were conducted out of the total determined sample size of 392. The study came out with some major findings which included the dominant use of financial source of finance, the existence of an underdeveloped mortgage market and uneasy access to formal credit facilities from financial institutions due to the type and nature of jobs. It was realized that this has affected housing delivery because homeowners had to build incrementally which took a lot of time before house completion. The study recommended microfinance for housing, site and services scheme by the financial institutions and a non-mortgage lending facility for the financial Investors. Also, how to sustain the formal credit facilities for the financial Investors is seen as an area for further research.
Content

The impact of monetary policy on the liquidity of commercial banks. 

Abstract
The study emphasized on the relevance of the banking industry and development and explores economic growth and the structural change in monetary policy in Nigeria. The first chapter trace the introduction of the liquidity position of commercial bank’s its effectiveness in monetary policy was identified. These include the inadequacy of the banking industry itself. Conflicts of monetary objectives and targets and the Nigerian economy witnessed both monetary stability and economic property. This was also further discussed broadly in chapter two including the factors that are containing monetary policy in Nigeria. The data for the study were collected by the use of personal interviews the data collected were tabled down, discussed and analyzed using sample parentage. Based on the findings it was discovered that the federal government as the central bank of Nigeria (CBN) has implemented a new monetary policy on all banks that cannot meet the CBN requirement which is 25 billion naira implemented. These factors have the role in the developing economy like Nigeria as a result of the following reasons (1). Poor banking habits. (2). Policy asymmetry (3).Inadequate securities (4).Lagged response. These also led to the problem of monetary policy management in Nigeria. This can be summarized as follows: (1). The issue of money outside the banking system (2). The role of the banking industry (3) The problem of the lingering distress in the banking industry. 
CHAPTER ONE BACKGROUND TO THE STUDY 1.1 Introduction This study is on the role of the financial investors in housing provisioning in Nigeria. Housing as a social need is vital to socio-economic development of every country (Giddings, 2007). The housing Investors is generally accepted as one of the most important determinants of the economic and social wellbeing of people. It plays a key role in the lives of people as the provision of shelter is one of the basic necessities of man (Moss, 2010). The need to provide adequate housing cannot be over emphasized and its importance can hardly be exaggerated (IMF, 2011). Derban et al (2002) indicate that the availability of adequate and decent housing enhances good living conditions and productivity of all individuals. It plays a vital role in the health, happiness and civilized living of the individuals. Housing does not only satisfy the physical and biological requirement of man but also upholds his dignity and improves his quality of life (NCH, 2008). The provision of housing is so linked with national economic development that the rate of house construction is directly related to the economic performance of a country (BoG, 2007). Unfortunately, the provision of housing worldwide has not been able to meet demand (Ogu and Ogbuozobe, 2001). This lag can be attributed to the population surge which has more than doubled in numbers in recent times (Giddings, 2007). Most developing countries are confronted with the problem of accommodating the rapidly growing population especially in their urban areas and Ghana is not an exception (Konadu- Agyeman, 2001). The provision of adequate shelter is one problem that the country has had to contend with. The inadequate housing stock and the lack of basic housing requirements induces stress and affects the living condition of households as well as productivity( Derban et al,2002). One of the major problems facing housing delivery in Ghana is finance. The unavailability and inaccessibility of housing finance mechanisms has been identified as one of the important hurdles in improving housing delivery in the country (Hoek- Smit, 1998). There are two main sources of finance in the housing finance system (Moss, 2010). They are the formal and financial sources. The formal source consists of government budgetary allocation and financial institutions in the form of mortgages. The financial sources include personal/family savings, individual money lenders, and remittances from family members. Over the years, government of Ghana through housing schemes and plans has found ways and means of financing housing in the country. The rationale for government intervention  in  the  housing  market  revolves  around  the  goal  of  providing  all Ghanaians with a decent house in a suitable living environment (IFA, 1993). During the 1970‟s and the 1980‟s, the main focus of government housing intervention in the country was by embarking on mass housing projects for the citizenry with the government being the sole financier of the projects. Examples of some of these housing projects are the government built low and medium class estates for civil servants (Afrane and Asamoah, 2011). Currently  government  plays  a  double  role  when  it  comes  to  financing  housing delivery (IFA, 1993). The government plays a direct role through the construction of public/mass houses but it is mostly not realized due to the lack of funds, lack of coordination and policy abandonment due to change in government. The government also plays an indirect role by creating an enabling environment through tax policies which includes tax subsidies for real estate developers and subsidized interest rates for borrowers from financial institutions associated to housing finance (eg. Home Finance Company Ltd). The liberalization of the housing market has facilitated the involvement of the private Investors in housing delivery (Sangore, 2003).The private Investors currently produces over 83 percent of the total housing stock in the country(Boamah, 2010).The private Investors is divided into formal and financial investors. The formal Investors includes the real estate developers and cooperative societies. These developers construct housing projects for individuals to purchase them but this approach mostly exempts the poor and the middle income earners due to the high cost of the houses. The formal Investors actors provide only a few thousand dwellings in a year (UN-Habitat, 2011).The financial Investors consists of individuals who engage in housing provision for themselves. Given the apparent trends in most of the developing countries, there are indications that the bulk of urban housing in these countries will continue to be produced by the financial Investors (Okpala, 1994; Ikejiofor, 1997). There is the need for efficient and effective housing finance systems for the financial Investors since finance plays a key role in housing delivery. 1.2 Problem Statement The Ministry of Water Resources, Works and Housing asserts that in order for the nation to remove the housing deficit of 1.7 million, the national housing production should be 170,000 units annually (MWWH, 2013). However the current supply capacity of the nation is in the region of 42,000 units per year (Afrane and Asamoah, 2011). Demand for housing in Ghana is higher in the three major urban areas; which are Accra, Nigeria and Sekondi-Takoradi (UN-Habitat, 2011). The Nigeria Metropolitan Assembly estimated that the total housing stock in Nigeria as of 2009 was 83, 693 (KMA, 2010) and this was distributed fairly amongst the ten sub metropolitan councils. The housing deficit in Nigeria Metropolis is startling since the total number of houses as of 2010 compared with the number of households indicated acute overcrowding in most houses (KMA, 2011). This constitutes a major problem and calls for an urgent need to address the situation. Even though the financial Investors is by far the largest housing supply system in most urban areas, it has not been able to meet the increasing demand for housing partly as a result of the inadequate and ineffective financial mechanisms for financing housing in the country (Moss, 2010). Finance is crucial to housing by the financial Investors and lack of access to financial resources is a major problem facing this Investors (Ogu and Ogbuozobe, 2001). In Ghana, very little is known about how homeowners finance the construction of new housing but it is however known that few homeowners have access to formal finance. This is because upfront finance is not easily accessible to allow them to purchase a higher quality home and pay for it over a longer and suitable period (Wapwera,et al,2014). This has resulted in most people financing through their personal savings but mobilizing savings and channeling them to finance housing projects has proven very difficult due to the type and nature of the jobs of the people in the financial Investors. They mostly do not have job security to enable them to save consistently. Personal savings also have had to compete with other household expenses making it extremely difficult (Ferguson and Smets, 2009). Moreover, financial institutions are cautious about lending to the individuals thereby making access to credit facilities very difficult (Hoek-Smit, 1998). They provide very little support to low and moderate households in the form of mortgages. Some only provide mortgage loans for a small proportion of newly constructed houses and home purchases (Hoek-Smit, 1998).But even these financial institutions have made very little progress in this regard. Financial institutions mostly do not want to consider long-term lending for housing a priority because of the associated risks involved in the jobs of the financial Investors. These risks include insecure and undocumented incomes and the lack of collateral on the part of the private individuals (Hoek-Smit, 1998).The limited access to finance has partly led to the development of slums and squatter settlement and poor housing conditions. The study focused on housing finance by the financial Investors. The financing options available to them and how they accessed funds for their housing projects and what can be done to improve their efforts in housing delivery in Nigeria Metropolis. 1.3 Research Questions
  1. What are the housing finance arrangements used by the financial Investors in Nigeria?
  2. What are the housing finance mechanisms that provide access to housing credit facilities to the financial Investors?
  3. What factors hinder access to housing credit to the financial Investors?
  4. What financial system can be put in place to improve access to housing finance by the financial Investors?
1.4 Research Objectives The main objective is to have a comprehensive understanding of the housing finance practises by the financial Investors in Nigeria. The specific objectives are:
  1. To know  the  different  types  and  characteristics  of  housing  finance mechanisms available to the financial Investors in Nigeria.
  2. To determine the major housing finance mechanism used by the financial Investors and how it affects housing delivery.
  3. To identify the  factors  that  hinder  the  financial  Investors  from  access  to formal housing credit facilities.
  4. To make suggestions for the improvement of access to formal housing finance by the financial Investors.
1.5 Scope Geographically the study is focused on Nigeria, the second largest city in Ghana after the national capital, Accra in terms of population, social life and economic activities. Nigeria is the capital of the Ashanti region. It covers an area of approximately 254 sq. km.  (GSS,  2005)  with  a  population  of  2,035,064  (GSS,  2012).  The  Nigeria Metropolis is made of ten sub metropolitan areas with each having its own unique housing  characteristics.  Nigeria  as  at  2009  has  an  estimated  housing  stock  of 83,693(KMA, 2010) growing at 2.4 percent per annum. Contextually, the study was on housing finance by the financial Investors in Nigeria. It looked at the housing finance mechanisms used by the financial Investors and the factors that hindered their access to formal credit facilities. The focus was on residential housing units with emphasis on private individual ownership. 1.6 Methodology The study adopted a cross-sectional design as a research approach and relied on both secondary and primary data sources. The simple random technique was used to select the ten communities from the ten sub metropolitan areas whilst the purposive and convenience sampling techniques were used in selecting the institutions and homeowners respectively. The units of analysis were residential home owners, officials of the Ministry of Water Resources, Works and Housing, SSNIT, some financial institutions (HFC Bank Ltd, Ecobank, UBA) and the planning and statistical department of Nigeria Metropolitan Assembly. (For more on the methodology, see chapter three of the report). 1.7 Significance of the Study The demand for housing in the country is very worrying and alarming. The Ministry of Water Resources,  Works  and  Housing estimates  that  the country needs  about 170,000 housing units annually but is able to produce just 35 percent of that total number. Meanwhile GREDA also asserts the nation is able to produce only 42,000 units per year from the required annual 130,000 units (Afrane and Asamoah, 2011). These two assertions show that the country has an annual housing deficit that needs to be tackled. Housing finance is a major problem in housing delivery in the country. Although the financial Investors plays a very key role in housing delivery, it has very limited access to credit  facilities  due  to  the  nature  of  their  jobs.  This  has  led  to  sub  standard construction of housing units, overcrowding in housing units, poor housing conditions and the emergence of slums and squatter settlements. The study therefore gives more insight into how the financial Investors finance housing in Nigeria and the housing finance mechanisms available for them and also make suggestions to the most appropriate housing finance mechanisms for the financial Investors to improve housing delivery. The study helps to know how best the financial Investors can access housing finance mechanisms fully in order to improve the housing situation in the Nigeria Metropolis. 1.8 organization of the Study The report is organized into six chapters. Chapter One of the report covered the general introduction to the study. It gave insight into the objectives, scope and significance and methodology of the study. Chapter Two discussed the literature on the practical aspect and the various concepts of the study. This literature gave more insight into the housing finance systems pertaining in both the developed and developing countries. Chapter Three discussed the methodology of this study. The chapter provided theoretical understanding of data collection techniques that were used and further explained how these techniques were applied. Chapter Four looked at the profile of the study area. It provided a detailed background of the study area which included the history, physical and demographic characteristics and the housing situation in the Nigeria Metropolis. Chapter Five focused on the analysis and presentation of the data collected from the various stakeholders involved in the study. The data collected were presented in tables, charts and diagrams. Chapter Six was the final chapter and presented the summary of findings, the conclusion and recommendations to address financial Investors housing finance challenges in the Nigeria Metropolis. 1.9 Chapter Overview The chapter gave a general introduction to the study. It looked at the objectives of the study, the research questions and the significance of the study. It also gave a brief introduction to the methodology that was used in the study. This allowed relevant literature on the study to be discussed in the next chapter.
Abstract
The critical review of the effect of global financial crisis on mortgage financing in Nigeria was looked upon the risk of global recessive has lighted significantly and vitality pf housing prices the objective of this study is to examine critically the relevance of financial crisis on mortgage finance housing. There is shortage of adequate finance facilities in Nigeria. The development of mortgage finance system in Nigeria were looked into the methodology used in this research work is primary and secondary data which included government and interview. The facts derived from their responses were tested. The researcher reached a conclusion that reason for the negative impacts of financial crisis were attributed to reduction in availability of capital risk. Shortage of fund supply to housing sector in Nigeria. In view of the above a recommendation was received that the government and central bank of Nigeria CBN should inject more funds to housing sectors.
CHAPTER ONE INTRODUCTION 1.1 Background of the Study Relationship marketing (RM) aims at establishing, maintaining and enhancing relationships between the organization and the customers at a profit so that the organizations objectives are met. When the relationship is established between the customers and the company, brand loyalty is created from the customers repeat purchase and this translates to more profits for the company (Victor 1990:36). Relationship marketing is a concept that has gained popularity over the recent years. Companies and banks are beginning to understand the value of creating a relationship with the customers. Consequently, they are now striving to develop meaningful relationship more proactively. This concept was originally introduced by Leonard Berry in 1983 when he emphasized that relationship marketing was based on the concept of developing a long term relationship with a customer for the purpose of patronage bearing in mind that other competitors are always available (Yan and Wu, 2007). According to Doyle & Stern (2006:3), relationship marketing is a long term continuous series of transactions between parties which occurs when each trusts other to deal fairly, reliably and helpfully. Relationship marketing has therefore emerged as ?a popular new paradigm due to shift in focus from customer acquisition to customer retention. It is likely to shift once again and will transform into customer relationship management (CRM) with a hybrid of marketing relationship programs that range from relation to out sourcing market exchange and customer interactions (Sheth & Kellstall,2002:30). It therefore suggests that when a good working relationship is built, negotiating time and costs are reduced and the patterns of transactions become more predictable and secure. Due to increased competition, todays banks are beginning to understand and employ the techniques of relationship marketing. To retain these customers, banks are now striving to develop meaningful relationships with key customers and moreso to manage those customer relationships more proactively (Connor, Galvin, Evans , 2004:16). Relationship marketing therefore attempts to create a more holistic, personalized brand experience (service) to create stronger customer ties. According to Kottler and Armstrong, (2009:14) a number of companies are today offering services and relevant facts to individual customers based on information about past transaction, demographics, psychographics, media and distribution preferences. By focusing on their most profitable customers, products and channels, there is a firm hope to achieve profitable growth capturing a larger share of each customers expenditure by building high customer loyalty. Relationship marketing is aimed at retaining existing customers since attracting new customers may cost up to five times more than retaining an existing customer. If Union Bank PLC and other commercial banks in Makurdi, Anambra State aim at increasing the size of their customers, the banks must train their employees in cross selling and up selling their products. There is need to realize the benefits from lowered costs and increased profitability from long term relationships between firms and their customers. On the other hand, customers will enjoy the transactions of an organization that understands them and their requirements and they will also have a reliable financial service provider. Simply put, therefore, relationship marketing involves all activities and efforts of the business organization aimed at creating and sustaining healthy relationship with the customers. This is necessitated by the fact that the customer is central to organizational activities. There is credence by the increasing rate of competition in the business circles especially in the banking sector. It is on this note therefore that Victor (1970:11) acknowledged that; ?the key to successful marketing is having the right product at the right price in the right place with the right promotion?. In the end, the person who decides the rightness of these four elements is the customer. The customer is therefore central to the 4Ps of marketing which are: Price, Place, Promotion and Product. It is the customer that determines the relevance of the 4Ps through patronage. Patronage therefore, is arguably the target of the 4Ps of marketing. However, relationship marketing seems to go a little beyond patronage and aims at securing the loyalty of the customer. The company, in this instance, should not limit the definitions of the business organization to the confines of profit making but should see it as a responsible citizen whose interest is to provide customers? well being. It is on this note therefore, that business orCHAPTER ONE

INTRODUCTION

1.1 Background of the Study

The banking sector in Nigeria has endured some difficulties in the past few years as evidenced by the recent scandals within the industry. Akelola (2015) points out that the widespread fraud in the banking sector is a major problem and it is becoming a concern for many Nigerians because of the ease with which individuals can commit it and the lack of sentencing of the involved persons by the courts. In Nigeria, the continued fraud incidents among banks has been the result of undetected fraudulent activities which lead to the increasing mismanagement of funds, which is then detected so late that it’s irreparable. Lack of disclosure of insider borrowing and mismanagement of funds for long periods will, over time, lead to falsified account books and later on the inability of the banks to pay their short-term and long-term liabilities. According to EFCC, the increasing rates of fraud in the banking sector are also attributable to the unwillingness of banks to effectively address fraud, inadequate laws, particularly concerning fraud, making courts fail to convict the involved individuals, and the lack of independence of the auditing role (Akelola, 2015). The increased incidence of fraud in commercial banks has posed a threat to traditional auditing as a branch of the accounting profession resulting in the question as to whether compulsory auditing is playing the role of early fraud detection and at the end, further prevention of more losses.   Central Bank had placed some regulations to stop this from further occurring, but despite this, another scandal happened under the regulator’s nose. According to Gitau & Gitahi (2016), the long history of bank fraud is resulting in a situation where stakeholders are starting to lose their trust in the industry. Fraud leads to a loss of credibility and a crisis of confidence among the public, and it raises questions on the going concern of the commercial banks in Nigeria.

1.1.1.    Forensic Audit Services

The word forensic refers to the application of knowledge to legal problems such as crime (Gray, 2008). Forensic auditing as a service, therefore, puts together auditing, accounting, investigative, and legal skills to find out whether accounting transactions concur with the regulatory requirements. All this is done to ascertain whether there has been the occurrence of any fraud. Forensic auditing involves gathering, verifying, processing, analyzing, and reporting on data with the aim of obtaining facts and evidence (Mohdi & Mazni, 2008) in a predetermined context in the area of financial irregularities. The Institute of Forensic Auditors (IFA) defines a forensic audit as an activity that involves the collection, verification, analysis, and reporting of data with the aim of collecting evidence to use in a court of law. The Institute of Certified Public Accountants of Nigeria (ICPAN) points out that the field of forensic auditing focuses on gaining an understanding of a fraudster’s mind in efforts to establish reasons for committing fraud as well as detecting them. Vukadinoc, Knezevic, & Mizdrakovic (2015) state that the focus of forensic audits is the investigation and detection of fraud and it involves two primary activities: investigating the fraud and providing litigation support services in the court of law. Forensic audit evidence gathered could be presented in a court of law in the case of litigation and could also be used to correct a situation that could lead to fraud. Forensic audit service is useful as both a reactive and a proactive measure in curbing fraud in an organization.  Proactive forensic auditing seeks out mistakes and deviant financial transactions before they graduate into fraud. According to Najnike, Dube, & Mashanyanye (2009), the proactive approach searches for the indicators of fraud or red flags and uses the philosophy that “catch fraud before it catches you”. It may revolve around a statutory audit, diagnostic tools, and regulatory compliance. A statutory audit is done by an independent professional on the financial statements of a company that has been compiled by the management with the aim of expressing an opinion pertaining the position, current situation and financial performance by the accounting principles. Regulatory compliance is testing an entity’s compliance with the various laws and regulations applicable to it and preparing a written report. Diagnostic tools have their application in determining the ability of the various components and procedures put in place to be functional and enable investigation of allegations. Reactive forensic auditing investigates any suspicion of fraud so as to prove or disapprove the accusations and if the suspicion is confirmed the person involved are identified, the findings are supported by concrete evidence, and a presentation is made in an acceptable form in any disciplinary or criminal proceedings. Reactive forensic auditing involves: working relations with the agencies in charge of investigating and prosecuting, authorization and control of audit investigation, documenting the relevant information and protecting all records pertaining to the case, evaluating the evidence to assess the sustainability of the case, the relevant legal advice where necessary, reporting the overall findings in a format that meets legal requirements. According to Onodi, Okafor, & Onyali (2015), the need for forensic investigations arises from the fact that the internal and external audit functions of organizations have been failing in the detection of corporate fraud. For instance, the traditional audit committees do not have the ability to uncover facts and hidden aspects of fraud, the rotation of the statutory auditors occur through collusion and manipulation, and most auditors do not undergo a thorough scrutiny of their qualifications. Therefore, forensic auditing skills are critical in uncovering and establishing the occurrence of financial fraud and crimes (Alao, 2016).

1.1.2 Forensic Audit Services and Fraud Detection

Financial fraud refers to committing illicit activities with the purpose of acquiring riches either as an individual or as a group, and it violates the existing legislation or accounting policies governing the economic activities and administration of the organization (Yio and Cheng, 2004). The actual fraudulent activity is hard to observe. Fraud only shows up through various signs in an organization these signs may also not indicate the occurrence of fraud as it may be a human error. Kenyon & Tilton (2015) categorizes fraud into four: asset misappropriation, fraudulent schemes in financial reporting, obtaining revenues and assets through fraud, and in expenditures and liabilities. Some obvious manifestations of fraud are a delay in submission of returns, late preparation or failure to prepare bank reconciliation statements, failure to segregate duties, the lifestyle of promoters of an organization or its directors and some key employees, and repeated internal control lapses and inability to adhere to norms of corporate governance. Albert (2005) states that at times fraudsters hide fraud in human made mistakes making it hard for forensic auditors to detect them. The success of fraud detection is in the appropriate identification of red flags by the forensic auditor (DiNapoli, 2016). A red flag refers to an anomaly in business activities and human behavior. However, their presence is not evidence that an illegal act has happened, but they simply indicate that the potential for fraud is high to warrant an investigation. DiNapoli (2016) gives examples of red flags for fraud, the most common being the behavior of employees and management. Also, red flags are observed in various organizational activities such as payroll, procurement, and in accounts receivable management. The Association of Certified Fraud Examiners (ACFE) points out that 64% of fraud perpetrators exhibit behavioral red flags, the most common being unexplained wealth and living beyond means. The expectation is that the frequency of occurrence of these red flags will reduce when forensic audit services are applied in an organization. Fraud detection is not the role of independent auditors, but it is up to the management to develop strong internal controls that will aid in the detection of fraud. However, with the growth of technology and size of organizations, fraud has also become too complex to be effectively addressed by management. White collar crime has become rampant in recent times, and the perpetrators do not face any legal action because of a lack of evidence (Ogutu & Ngahu, 2016).  Fraud is becoming a concern in the commercial banking sector in Nigeria because the statutory audits have failed to uncover or prevent frauds. As a result, the four banks (Access, Keystone, Polaris and Fidelity Bank) and other organizations such as Nigeria Airways have resorted to forensic audit services to uncover fraud and mismanagement (Ogutu & Ngahu, 2016). Popoola, Che-Ahmad, & Samsudin (2014) point out that the adoption of forensic auditing skills in every sector of the economy significantly enhances the detection of fraud.

1.1.3    The Banking Sector in Nigeria

In Nigeria, there are 23 commercial banks (CBN, 2019). The Central Bank of Nigeria (CBN) is charged with the supervision of the banking industry. Its role is to review banking laws and policies, issue licenses to financial service providers and banking agencies, and exercise oversight authority over the industry. The Nigerian Banking sector has been through two main waves of crisis and many of them collapsed. The number of failed banks as at 1998 was 22 (Akelola, 2012) and the some of the reasons for the collapses were mismanagement in the disbursement of loans, weak legal and regulatory controls, adverse selection of customers resulting in non-performing loans. Therefore, unsound banking practices, fraudulent practices by the managers, employees, and even the Board of Directors (BOD) have been a major problem in the Nigerian Banking sector. With the growth of commercial banks, the number of shareholders and separate ownership from the management has been on the increase which increases the risk of management committing fraud and malpractices.  Therefore, this has necessitated the regular use of forensic auditing services on both the non-financial and the financial report. In 2014 the Nigerian commercial banks lost $9.4 million to fraud in just six months. EFCC report cited credit card fraud, forgery of documents, and online fraud as the modes through which the banks lost money. This study focuses only on the commercial banks in the Nigerian economy with concern being how forensic auditing as a tool for detection can be used to better the services offered the Nigeria commercial banks.

1.2 Research Problem

The role of the CBN in bank supervision is to develop and review laws and guidelines that govern the banking sector and exercise oversight over all players in the banking sector. In the recent past, there has been a rampant increase in the closure of bank due to fraudulent activities like fraudulent financial reporting, forgery, corruption, and embezzlement of funds by the management and other bank officials. Since CBN is only tasked with acting as an oversight body for the banking sector, bank managers and employees have found a loophole to conduct fraudulent activities and later cover up their tracks through internal auditors or even going as far as colluding with external auditors. Banks are expected to carry out their responsibilities with sincerity of purpose devoid of any fraudulent activities (Gitau & Njenga, 2016). However, the sector has been on the spotlight for the many allegations of fraud and some have been put under receivership even to the extent of closure. The public has been concerned why these frauds have not identified and prevented and this points out the failure of the management in setting up strong internal control systems as well as laxity in the regulatory bodies. According to Gitau & Njenga (2013), EFCC is not proactive in the fight against bank fraud and few individuals have been prosecuted over fraud charges.
Abstract
Banks today are the largest financial institutions around the world, with branches and subsidiaries throughout everyone’s life. However, commercial banks are facing risks when they are operating. Credit risk is one of the most significant risks that banks face, considering that granting credit is one of the main sources of income in commercial banks. Therefore, the management of the risk related to that credit affects the profitability of the banks. The main purpose of the research is to investigate if there is a relationship between credit risk indicators and return on equity in commercial banks in Nigeria. We also aim to investigate if the relationship exists between capital adequacy and return on investments in commercial banks in Nigeria. Research questions were formulated from the objective of the study. Simple percentage statistical tests are performed in order to test if the relationship exists. The findings reveal that risk management does have positive effects on a bank's profitability. 
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