Relationship Between Fraud Risk Management Practices And Financial Performance Of Commercial Banks In Kenya

Abstract

A number of studies have been done in Kenya on fraud risk management practices. However none of the studies focused on the relationship between fraud risk management practices and financial performance of commercial banks. This study sought to establish the relationship between fraud risk management practices and financial performance of commercial banks in Kenya. The objective of the study was to investigate the relationship between fraud risk management practices and financial performance of commercial banks in Kenya. The target populations for the study were the senior officers in the risk management department of the 43 commercial banks operating in Kenya. The research data was collected in Nairobi. The sample size comprised of all the 43 commercial banks operating in Kenya. Primary data was collected using structured questionnaire. The questionnaire was self-administered through drop and pick later. A total of 43 questionnaires were administered. Collected data was then analyzed using SPSS Version 22. The results were then presented in form of tables and charts. The results of the study indicated that there exists a positive relationship between fraud risk management practices and financial performance of commercial banks in Kenya. It also found out that preventive and detective fraud risk management practices had a very strong positive (Pearson correlation coefficient of 0.932 and 0.868) influence on financial performance of commercial banks as measured by ROA. It is therefore imperative that commercial banks use preventive and detective fraud risk management practices in order to put fraud risk exposure under control and to improve financial performance.