Computer Science & Electrical
Received: 23 Mar 2018 , Published: 23 April 2018
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|1||DR.COLLINS ODUOR ONDIEK|
|2||MAURINE AWUOR ONYANGO|
Available statistics from across the world designate that banking sector has suffered the highest fraudulent payment incidents and firms losses no less than 5% of its yearly returns to fraud. This translates to approximately Kshs 13 Billion of the Kenyan’s consolidated commercial banks returns in 2016. There is also evidence that fraudulent payment rate is increasing in Africa as a whole and Kenya being on the top in Africa. Commercial banks in Kenya continued to adopt variety of technology, including online banking during the last ten years. It has however not been established whether the rise in fraudulent payments are as a result of online banking associated risks like operational risks, legal risks, and security risks. The study was set to find if online banking associated risks are related to fraudulent payments among within this sector. Study objectives were to: determine the effect of operational risks; establish the effect of security risks; and to establish the effect of legal risks on fraudulent payments. The study targeted 43 commercial banks licensed by Central Bank of Kenya from which 30 banks were sampled. Regression analysis was used to test the hypothesis that; no significant correlation between emerging risks in online banking and fraudulent payments in commercial banks in Kenya. It revealed a positive and significant effect of emerging online banking on fraudulent payment among commercial banks in Kenya. The management of commercial banks are therefore provided with essential insights on the overall effect of emerging risks associated with online banking which presents a challenge to the regulatory authorities as to where their energies ought to be put in preventing banking fraud in the sector.
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