Predictors Of Computerized Financial Fraud Among Commercial Banks In Kenya

ABSTRACT

The main objective of this study was to evaluate predictors of computerized fraud among commercial banks in Kenya. The specific objectives were; to explore the effect of Quality Management, employee’s behavior anomalies and operational red flags on computerized financial fraud in commercial bank in Kenya. The study was anchored on two theories namely theory of mindset and fraud triangle theory. The study employed a descriptive design. The study used Primary data. A target population was 172 managers in the banking sector in Kenya. A stratified sample of 72 bank managers was used in the study. Primary data was collected using self-administered semi-structured questionnaires. SPSS software version 21 was used. Data analysis results were presented in form of descriptive statistics, that is, mean and standard deviation in tables, charts and figures. In order to answer each of the research questions, linear regressions at 5% level of significance was used. Model fitness (R2 ), ANOVA statistics and regression coefficients were generated and interpreted. Conclusions were drawn for each of the specific research objectives. Results of the study revealed that the influence of Quality Management, Employees Behavior Anomalies and operational red flags as predictors for computerized financial fraud in commercial banks in Kenya had a positive correlation and significant. The study recommends that the management of commercial banks in Kenya to ensure there is a higher level of policy compliance. The study further recommends that the management of Kenya commercial banks to conduct frequent internal auditing erase the possibility of a fraud. There is also need for the management of commercial banks in Kenya should boost the confidence and integrity level of staff so as to prevent financial fraud. The study further recommends that the management of commercial banks should ensure there is job rotation so as to prevent the staff from getting too familiar with the system thereby avoiding the possibility of a computer fraud. Moreover, the management of commercial banks should regularly audit their staff lifestyle so as to monitor fraud. There is also a need to frequently monitor high number of false overtime claims so as to prevent financial fraud. Finally, the study recommends the management of commercial banks to ensure they provide effective training for customers and employees. There is also a need to ensure there are no failures of security controls so as to prevent anticipated computerized financial fraud in commercial banks. The study further recommends the management of commercial banks to ensure there is an effective management team so as to reduce computerized financial fraud. In addition, the study recommends the management of commercial banks in Kenya to ensure there are no voluminous cash transfers as this reduces the vulnerability of staff to commit financial fraud.