Complete Fyp Credit Card

An Empirical Study on the Preventive Mechanisms of Credit Card Frauds in the Banking Industry of Dhaka, Bangladesh
Table of Contents
CHAPTER 1 INTRODUCTION AND BACKGROUND ....................................................................... 3
1.0 Introduction ..................................................................................................................................... 3
2.0 Research Background ..................................................................................................................... 3
3.0 Problem Statement.......................................................................................................................... 6
4.0 Research Objectives ........................................................................................................................ 7
5.0 Research Questions ......................................................................................................................... 7
6.0 Scope of the Study ........................................................................................................................... 8
6.0 Definition of Terms ......................................................................................................................... 8
CHAPTER 2 LITERATURE REVIEW ................................................................................................... 9
2.0 Introduction ..................................................................................................................................... 9
2.1 Internal Control Systems................................................................................................................ 9
2.2 Audit Procedure ............................................................................................................................ 11
2.3 Risk Management Strategies........................................................................................................ 13
2.4 Research Theory: Fraud Triangle ............................................................................................... 15
CHAPTER 3 RESEACH METHODLOGY ........................................................................................... 17
3.0 Introduction ................................................................................................................................... 17
3.1 Research Conceptual Framework ............................................................................................... 17
3.2 Research Hypotheses .................................................................................................................... 18
3.3 Research Design ............................................................................................................................ 18
3.4 Research Philosophy ..................................................................................................................... 19
3.5 Research Classification and Approaches .................................................................................... 19
3.6 Research Strategy ......................................................................................................................... 20
3.7 Research Choices .......................................................................................................................... 20
3.8 Data Collection .............................................................................................................................. 20
3.9 Instrumentation............................................................................................................................. 21
3.10 Sampling ........................................................................................................................................ 21
3.11 Research Analysis ......................................................................................................................... 22
3.11.1 Frequency Descriptive Statistics Analysis .............................................................................. 22
3.11.2 Reliability Analysis of the Questionnaire ............................................................................... 22
3.11.3 Normality Analysis.................................................................................................................. 22
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3.11.4 Bivariate Pearson Correlation Analysis .................................................................................. 23

3.11.5 Multiple Linear Regression Analysis....................................................................................... 23
3.12 Ethical Considerations.................................................................................................................. 23
CHAPTER 4 FINDINGS AND DISCUSSION ...................................................................................... 24
4.0 Introduction ................................................................................................................................... 24
4.1 Demographic Profile (Descriptive Analysis of Personal Data): ................................................ 24
4.1.1 GENDER .......................................................................................................................................... 24
4.1.2 AGE ................................................................................................................................................. 25
4.1.3 MARITAL STATUS ........................................................................................................................... 26
4.1.5 Designation .................................................................................................................................... 27
4.1.6 Income Level .................................................................................................................................. 28
4.1.7 YEARS OF EXPERIENCE ................................................................................................................... 29
4.1.8 Internal Control Systems at the Bank ..................................................................................... 30
4.1.9 Attitude of management towards prevention of credit card frauds ............................................. 31
4.1.10 Ethical behaviours and values of the management and the staffs of the bank that limit credit
card frauds .............................................................................................................................................. 32
4.1.11 Adequacy of actions taken by the management to prevent credit card frauds .......................... 32
4.1.12 Regular review of the internal controls by the management...................................................... 33
4.1.3 Audit Procedure at the Bank ................................................................................................... 34
4.1.4 Risk Management Strategies at the Bank ............................................................................... 37
4.1.5 Credit card frauds prevention mechanism in the banking industry ....................................... 40
4.2 Chapter Summary ........................................................................................................................ 43
CHAPTER 5 DATA ANALYSIS AND INTERPRETATION.............................................................. 44
5.0 Introduction ................................................................................................................................... 44
5.1 Reliability Analysis of the Questionnaire.................................................................................... 44
5.2. Normality Analysis........................................................................................................................ 45
5.3 Bivariate Pearson Correlation Analysis ...................................................................................... 46
5.4 Multiple Linear Regression Analysis .......................................................................................... 47
5.5 Summary of the Findings from Hypotheses Tests ..................................................................... 49
5.6 Chapter Summary ........................................................................................................................ 50
CHAPTER 6 CONCLUSION AND RECOMMENDATION ............................................................... 51
6.0 Introduction ................................................................................................................................... 51
6.1 Conclusion ..................................................................................................................................... 51
6.2 Recommendations ......................................................................................................................... 53
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6.3 Contributions of the Study ........................................................................................................... 53

6.3 Limitation of the Study ................................................................................................................. 54
7.0 REFERENCES .............................................................................................................................. 55
APPENDIX SURVEY QUESTIONNAIRE............................................................................................ 59
CHAPTER 1
INTRODUCTION AND BACKGROUND
1.0 Introduction
This is the introductory chapter that discusses the background of the study with problem
statement. Moreover, research objectives and research questions have constructed fundamental
parts of this chapter. These are followed by scope of the study and definition of relevant terms.
2.0 Research Background

In the article written by Erduardo Mirahyes, he generally argues and makes an agreement that the
best way to start making money is to stop losing it. Despite the size in which a firm operates in,
there are no smaller chances that it will not be vulnerable to bank fraud risks at any given time.
Inevitably, there will come the point of time that an entity will be exposed to such risks.
Generally, a fraud is a kind of financial exposure risk where an entity becomes a resultant effect
of financial losses due to weakened internal control systems and staff or working personnel by
such systems (Mirahyes, 2016). Sometimes, it might be due to some other external factors or
occurrence of events, for example, financial world crisis. Such activities as explained before are
not under the control of the hands of the internal management of an entity. As a result of this,
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credit card fraud takes the top most interest and priority in an entity to be looked upon into and
designed mechanisms in which it can be counter-effected.
When it comes to managing and controlling this risk, it is considered one of the toughest risks to
mitigate. It takes into account a major time and resource investment by the senior most
management. Here, the development of corporate governance policies which will act as a
protective gear against such risks is designed. This will include activities like designing very
strong and effective internal control systems, developing strategic risk management procedures
and also training working employees in the entity in keeping up with such designed rules and
regulations (Zetter, 2018). As much as this is taking place, there will still be loop holes in which
some intelligent persons; in or out of the entity, with a malicious intention of overriding such
mechanisms so as to pilfer the organization’s resources and/or assets by deceiving honest people
and forcefully gaining access into their business accounts with the entity (Zorz, 2018).
A newspaper article published by The Daily Star in Bangladesh acknowledges that credit card
frauds are on the rise in the country, to the extent that it is very alarming. Fraudsters have been
perfecting their art of frauds to the extent that it is very easy for them to scam by getting
confidential information pertinent to account holder’s credentials through the ATM card vending
booth and another point of sales as well as at banks. Similarly, according to the same publication,
between 6th and 12th February, 2017, fraudsters have managed to store away with approximately
25,000 Bangladeshi Taka and this has been through the achievement of having managed to clone
fake credit cards of various people’s accounts (Rahman, 2018). This clearly shows how alarming
the credit card fraud is at the peak in Bangladesh and that is just one in one million reported
cases (Kiernan, 2017).
According to the Business Standards of Bangladesh, foreigners have also managed to exercise
self-interest tries in nonchalantly taking advantage of the art of fraud in the country. 40 cloned
bank cards were confiscated from a foreigner at an ATM booth in Bangladesh while he was
detected stealing money from various people’s accounts. An active alarm was sent to shut down
all the banks’ accounts transactions temporarily before apprehending the criminal. Security
camera built in the ATM booth helped in the process of identifying the frauds when the foreigner
looked suspicious. Police reported that on an average basis over 10 million cards are used across
Bangladesh in over 7,000 ATM booths in causing frauds (Ian, 2017).
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According to the Green Watch, it reports that many if not most of these reported cases of credit
card facility frauds are associated with the working staff most of the times conniving with the
fraudsters. How does the notion of managing to forge a cloned credit or debit card come about?
They believe based on the cleared cases as reported by Chief Strategy officer of Fiber at Home;
Sumon Ahmed Sabir, working staff have managed to plant security cameras to oversee the pin
display when account holders are making their transactions at the ATM booths. Then this
information is trickled to the fraudsters in association thus managing to clown fake credit cards
and eventually causing their frauds and scams (Nahar, 2018).
In New York, seven Bangladeshi citizens were arrested in a credit card fraud involving nearly
USD 3 million in 2017. The frauds took place in banks like Citibank, Chase Bank of America,
American Express and Bank of America where suspicious transactions were overseen and tracks
of trails were investigated to be later located in a house at Queens District in America. ID
duplicating machines, cars bought from the scammed money, fire arms and thousands of fake
credit cards were confiscated by the federal police officers. This shows that credit card facility
fraud is not only one country’s issue but is a generic global issue and can harm any financial
institution around the world (BD News 24, 2018).
Figure 1: Flow chat for credit card fraud detection
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In this technique the Clustering algorithm is used for creating three clusters and clusters
represent observation symbols. Then calculate the clustering probability of each cluster, which is
a percentage of some transactions in each total cluster number of transactions. However, in this
proposed system to check the original user as maintaining a log.
3.0 Problem Statement

There is a surmountable amount of time, energy and resources which are channelled into
designing the best fit ways to reduce bank frauds in any financial institution. Coming up with
corporate governance systems which are effective in combating any possible occurrence of fraud
and its related risks are structured. Internal control systems as well as risk management
procedures are structured to emphasise the preventive mechanism against bank frauds. Despite
all that, there are still happenings of credit card frauds where smart people seem to override such
mechanism and pilfer their way through such preventive measures. These fraudsters pass through
such systems may be because of some loopholes of weaknesses surrounding the measures or
because of the help they get assisted from by the internal members of the same institution
(Akinyomi, 2012).
The issue to be pondered is with all the above said regarding the efforts made by banks in
coming up with calculated strategies to minimise the existence of frauds taking place, why is it
that in Bangladesh several cases are reported of scammers and fraudsters to have managed to go
through the protective mechanisms of banks in bidding away money from several accounts
holders? Could it be that the internal control procedures designed by the banks are not well
efficient? Alternatively, are there any loop holes existing in the management boards of the
financial institutions leading to the existence of such financial havoc pandemonium (Bank,
2018)?
According to many reported cases of credit card facility frauds reported in Bangladesh, it seems
vividly clear that the police officers are aware of what is happening and so are the banks. A mind
boggling question pertinent to such a scenario is why is it that other cases are reported later on
from other banks have experienced a similar case as the one been reported earlier on? Are there
any preventive mechanisms which can be implemented to be set to curb the happening of credit
card facility fraud or is the hope lost in internal control systems to combat credit card frauds in
Bangladesh?
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According to the theory of Fraud Triangle which will be discussed later on in Chapter Two of
this research paper, the occurrence of fraud always has a reason. This could be because of the
poor internal control systems or weak risk management strategies implemented by the banks. It
could also be because there is the poor training of bank personnel against a measure to combat
and oversee the happening of frauds. Lastly, it could be due to the impaired rationalization and
opportunity of investing in a platform which welcomes in fraud by the internal employees of the
banks. Thus, with all the reasons above what could be the aftereffect cause of Bangladesh credit
card frauds happening?
4.0 Research Objectives

Below are the research objectives of this paper;
1) To find out if internal control systems can combat credit card frauds in the banking
industry of Dhaka, Bangladesh;
2) To analyse if audit procedure can be involved in reducing credit card frauds in the
banking industry of Dhaka, Bangladesh;
3) To find if risk management strategies can be used as defensive mechanisms in
reducing credit card frauds in the banking industry of Dhaka, Bangladesh;
5.0 Research Questions

Below are the research questions governing this research paper;
1) What are the internal control systems to combat credit card frauds in the banking
industry of Dhaka, Bangladesh?
2) What are the auditing procedures involved in credit card frauds in the banking
industry of Dhaka, Bangladesh?
3) What are the risk management strategies implemented in banks to curb credit card
frauds in the banking industry of Dhaka, Bangladesh?
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6.0 Scope of the Study

The scope of this research paper is confined to the capital of Bangladesh, Dhaka City only.
Dhaka city is a metropolitan city in the country and is harboured by so many operating banks.
The banks operating in Dhaka are myriad regarding capacity; private-owned, internationally
owed, state-owned and also non-governmental. Thus, this serves the best fit platform for
conducting such a research paper since it will accumulate the data from all the spectrum of
banks.
6.0 Definition of Terms
Terms Contextual Definition Operational Definition
Fraud Akinyomi, (2012) defines fraud as The act of conning people by

the illegal way of obtaining access to overriding internal control system
a right account holder of an asset or and risk management procedures
monetary value by fraudulently and accessing the rights of a
posing as a bank or impersonating a person’s money and assets in a bank.
said account holder.
Risks Coates and Gurnel (2017) define it as Financial losses experienced from an
the risks associated in finance and occurrence of a calculated bank
their occurrence lead to poor fraud
performance of an entity or
individual regarding losses since
they are as a resultant effect of a
downside happening.
Credit This is the act of obtaining forced The act of holding a clowned credit
Card access in someone’s account without card facility and forcefully accessing
having been granted access or bank’s accounts to illegally distort
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Fraud authorisation with the purpose of money.

obtaining goods for free without
paying and/or obtaining access to
funds (Barker, D'Amato & Sheridon,
2008).
Table 1: Definition of Terms
CHAPTER 2
LITERATURE REVIEW
2.0 Introduction
This chapter presents review of academic literatures with regards to the independent variables.
The chapter begins with literature review of the first independent variable, internal control
systems. It is followed by discussion on other two independent variables, namely, audit
procedure and risk management strategies. A theory relevant to this study, the Fraud Triangle
theory is also described at the end of this chapter.
2.1 Internal Control Systems

One of the proposed mechanism to reduce and measure the commitment of frauds is through
implementing a good internal control system. This ensures that there is total control in the
working environment concerning business activities carried out. The management is always
entitled to the responsibility of employing and enforcing a good working internal control system.
If as such is implemented only then will there be fewer loop holes for the fraud to take place
(Michelon, Bozzolan & Beretta, 2015).
At any given time, when there is a weakness in the implementation of the internal control
system, it might give way for the management to swerve into investing in a platform of fraud.
This is because no man is a saint and as such this is probe one to take advantage of the created
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opportunity to commit fraud. It will be easy to execute such types of fraud as the top
management has the full authority and can surpass the level of scrutiny and inspection at any
given time. Consequently, a good internal control system will make sure such deviances will not
take place.
Technological advancement can as well be a platform where a basis of fraud creation can be
implemented. This is because such a manoeuvre makes sure any fraudulent acts committed by
fraudsters are not easily visible as tricks and manipulative mechanisms are made through the
advancement of technology. Innovation and invention can be a pro basis in creating better
opportunities in the banking industry but at the same time it can be a con in the determining how
safe individuals can be (Länsiluoto, Jokipii & Eklund, 2016).
The internal control system is made up of a myriad of items. This could range from internal
auditing to professional objectivity and nature of work execution. It involves much monitoring
and controlling of banking activities in the banks. Before any transaction is approved to another
department from one said department or to an outside party/client then a structural basis of
authority needs to be passed through to validate the authenticity of the nature of the situation (Ji,
Lu and Qu, 2016).
Research conducted in Saudi Arabia proved that bank frauds are the top most frauds committed
in the current era of the banking world. Even more worse is that fraudsters have become way too
smarter and clever in the sense that it is not easy to track the trails of fraudsters after they have
committed their frauds. Many of the frauds committed in recent times are well executed and
planned as well. Orchestration of time and series of events is well established. Thus, for the
internal control system to be considered very effective and efficient in curbing and deterring the
fraudsters in committing their malicious acts it is very ubiquitous and important that the internal
controls systems instituted are strong (Al-Thuneibat, Al-Rehaily and Basodan, 2015).
There are some types of frauds which can be committed. With all the existing types of frauds all
have one common string attached to them; there is a violation of privacy and distortion of
personal assets and monetary resources from one party to another. It has been agreed by many
researchers regardless of the nature and type of the fraud committed, the internal control system
should be the best fit mechanism implemented to curb the occurrence of frauds in any institution
(Zhou, Chen & Cheng, 2016).
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Another research conducted by Michelle Rubina and Fillepe Vitolla was to investigate the
relationship between the internal control system and fraud on the general performance of a
company. It was noted that when the internal control system of the company was weak, the
general performance of the company was seen to deteriorate slightly concerning its stock prices
against the financial market. Thus, it was proven that there is a positive relationship between
fraud and internal control system in the general performance of an entity. Such influence reflects
on the important nature of its functionality in all matters pertinent towards the performance of a
bank (Rubino & Vitolla, 2014).
However, a study by Ahmed, Madawaki and Usman (2014) attempting to analyse the causes and
effects of frauds and forgeries and suggest possible ways of preventing frauds in Gombe
concluded that despite the internal control measures existing in the commercial banks, the frauds
and forgeries have been on an upward trend. However, the level of frauds were less acute in the
merchant banks. Thereby they suggested the commercial banks to adopt a stronger internal
control system.
Based on the above discussion made, the researcher agrees that there is a relationship between
bank fraud and internal control system, thus, the following basis of the hypothesis was
developed; Ho; there is no relationship between credit card fraud prevention mechanism and
internal control systems of the banking industry in Bangladesh.
2.2 Audit Procedure

Internal control systems are usually considered as one of the front line basis in the banking
industry in combating against the occurrence of frauds and also detection of their existence. This
does not mean that if at any given time there is a weak internal control system then frauds will
take place. Instead it means that there is a possible chance of the fraud to happen and not be
easily noticed since the platform of execution is viable and free to manipulate. Very obsolete
accounting software and systems, poor inventory control systems, lack of definitive segregation
of duties in a company could be some of the aspects of poor internal control systems. As such
there is a dire need for internal and external auditing to be encountered in by the business so that
no further damage can be extrapolated (Jeppesen & Leder, 2016).
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An auditing session is a system of scrutiny and examination done at periodic times in a financial
year. It can be done twice after every six months before the closing of the financial year or done
quarterly if the transactions involved in the company are tedious and bulk and sometimes involve
a lot of monetary transactions. Therefore, in order to reduce the financial risks in such area these
examinations are conducted to test on the truthfulness of the existing transactions and recordings.
It can either be conducted internally by the company’s department of auditing or be outsourced
from another independent company as an external auditor who is free from biasness (Gupta &
Gupta, 2015).
There are several questions poised for auditing when it comes to prevention of frauds of the bank
in nature. Some of these questions are like does the bank run an employee screening before they
are employed in by the bank? Does the internal control system work for the company’s benefit?
Does the rotation of work take place at every department and business counter to reduce work
familiarity and routines job experience? Do transactions taking place at the bank protected by
strong firewalls and possess secured passwords? These are some of the questions which can be
posed to ensure good auditing takes place in minimising the happening of a credit card fraud
(Fafatas, 2010).
Internal and external auditing has been seen as an important tool in minimising the occurrence of
bank frauds. In a research carried out by Kouakou, Boiral and Gendron (2013) it was seen that
even when auditing was not made compulsory as a regulation many companies nearly 80 per
cent were willing to conduct and continue with auditing. This is because they had good faith in
the working nature of the auditing in minimizing frauds to take place as well as reducing agency
problems as there is a close supervision of activates taking place and thus working employees
tend to shy away from being questioned or held accountable for mistakes and/or offense
committing in running their job responsibilities (John, 2012).
Coram, Ferguson and Moroney (2006) conducted a study on the fraud data collected from 2004
KPMG Fraud Survey and found that organizations that have an internal audit function are more
likely to detect fraud within the organizations. However, organizations that outsources their audit
functions are less likely to detect fraud. A latter study by Coram Ferguson and Moroney (2008)
found that organizations with an internal audit function are more likely to detect fraud arisen
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from assets misappropriation than those without an internal audit function. They concluded that
internal audit function is a fundamental part of the corporate governance in an organization.
Salamah, Weshah and Nsour (2011) examined the effect of internal audit functions on prevention
of fruads in Jordanian banking industry and revealed that the internal audit units are perceived
more effective than the external counterparts in fraud prevention, since the internal auditors have
more in-depth knowledge about the culture, practice and policies of the banks. Kristo (2013)
explored the role of internal auditors in the Albanian banking sector and concluded that internal
audit function is of absolute necessity. However, the audit units of the banks need more
improvement in terms of competencies.
developed; H0; there is no relationship between credit card fraud prevention mechanism and
audit procedure of the banking industry in Bangladesh.
2.3 Risk Management Strategies

The risk is generally considered as the occurrence of an unfortunate event where it will cost the
entity some financial losses because of the nature of the occurrence of the event. These financial
losses are detrimental to the general performance of a bank or any business entity in that case. In
the midst of the risks taking place, there are proposed a mechanism in which can be designed to
reduce the risks taking place where some examples of bank fraud risks measurements could be
an upside, downside and uncertain management controlling strategies (Bilal, Talib & Khan,
2013).
When it comes to risk management it is generally a term encompassing a whole lot of so many
items in the financial terminology. As a result it is very crucial for management to fully
understand the nature of risk management and all the whereabouts involved in it. Measuring the
risks assigned under his job scope is very essential in making sure that the job specificity is
reached to its purpose. Therefore, risk management can be sued by the management to see if
whether or not the decisions made in the entity were viable enough to warrant a good
performance or not. There are myriad types of risks in the banking sector, these include credit,
market, interest, liquidity and operational risks (Megeid, 2017).
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Banks are very prone to risks especially the financial type of risks. As a result, it is very
important for the banks to be very alert on a daily basis in making sure that the risks are
measured and observed. This is because financial risks are closely associated with bank frauds.
The main goal of risk management is not only to make sure there is no or less occurrence of
speculative risks leading to financial losses but also to keep consistency and sustainability in the
general performance of a financial entity (Lee & Isa, 2017).
Risk management strategies have by many researchers been accolade by the nature of them being
pre-crisis active when it comes to any occurrence of financial risks and frauds taking place. Even
if the occurrence will fully take place the consequent effect of the extent of the situation will be
less mild as compared if there were not instituted mechanisms to counter attack risks. Thus this
shows that risks management procedures and principles in any firm in the business are equally
important since they offer protective mechanisms against the exposure caused by bank frauds
(Mokni et al., 2014).
Risk management disclosure is yet another very essential strategy in preventing the occurrence
of internal fraud which might be caused by the internal insight of working employees. It has been
that the disclosure when done voluntary brings about to good performance representation as
every detail in the financial statement is well designed and arranged in its terms of credibility and
reference. It offers a high corporate reporting to both the internal users of the financial statement
as well as the external users of the entity. This in turn increases the faith and trust of investors
and clients. Thus, it is very essential for banks to voluntary disclose their risks as it does not only
manage their risks but also creates a basis of truthfulness and alert against the occurrence of
potential financial risk and frauds (Abdullah et al., 2015).
developed; H0; there is no relationship between credit card fraud prevention mechanism and risk
management strategies of the banking industry in Bangladesh.
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2.4 Research Theory: Fraud Triangle

In 1950, Donald Cressey decided to research what probes an individual in a business entity to
commit fraud(s). He conducted this on a research basis for five months consecutively after
having issued 250 questionnaires. After his designed hypothesis which revolved around three
main set of variables, his set hypothesis was later proved right and true that any person(s) who
commits fraud is geared by either of the three reasons; pressure, rationalization and opportunity.
He inter-related the three objectivities and later formed what is commonly known as the Theory
of Fraud Triangle (Brumell Group, 2015).
For any fraud to be committed it is believed by Cressey that there at least should be an
opportunity. This means that if for example, one said individual wants to manipulate the books
of accounts, per say, he needs the easiest platform to do as such. This could be easily done if he
can fully inspect the books without being questioned or raise any suspicion. More so, if he holds
the books of accounts and keeps recording purposes to date. The scenarios above all create an
easy and seamless pathway in giving the fraudster a basis to commit fraud.
Secondly, it could be due to pressure. This might be both internalization and externalization.
Internal pressure is due to a personal need to restore or ‘salvage’ the occurrence of a situation,
for example, window dressing the book of accounts to attract foreign investors in investing in
one’s company. External pressure is the one which is not voluntary but is forced by to an
individual from an external party may be because the rest possess power and control and they do
not possess the needed expertise in nonchalantly showcasing the fraud in a skilful way. Finally,
the final one is by rationalization. This is considered to be the boggling one in the sense that it
revolves around the individual perception in arguing out the true existence of the crime
committed into it being ‘fine’. For example, one might have committed fraud and sanguinely
argue that it was for the better good of the community as he will share the money he stole in
building a school for children to study in or it is considered fine because everyday people steal so
one person’s mistake will not be harmful.
From his analytical reference he concluded that for any type of fraud to take place, there should
be the existence of any of the three avenues or more than one or at times all of them entwined
together; opportunity, rationalization and pressure. His research from the time he concluded it in
the 1950s until today he been agreed upon by many other researchers. With this, it also as well
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fits in for this research paper’s variables in committing bank frauds in Bangladesh; internal
control systems, auditing and risk management systems (Brumell Group, 2015).
Figure 1: The Fraud Triangle
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CHAPTER 3
RESEACH METHODLOGY
3.0 Introduction
This section will show which methodology the researcher has utilized with a specific end goal to
answer the research questions. It clarifies the research framework, research hypothesis, the
research design, research philosophy, research classification and approaches, research choice,
time horizon, data collection, instrumentation, sampling, research analysis, ethical consideration.
It is a rundown of how the researcher will way the research from information social affair to
investigation lastly suspicion from discoveries.
3.1 Research Conceptual Framework

As a basis of the literature review, the following is the designed research framework for this
paper;
Internal Control
System
Credit Card Fraud Audit procedure
Risk Management
Strategies
Dependent variable Independent Variables
Figure 2: Research Framework (Designed for this research paper)
Above is a diagrammatical representation of the research framework in which the dependent

variable; credit card fraud is governed by the interrelationship of three independent variables
namely; internal control systems, audit and risk management system as the suggested ways to
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curb the happening of the credit card fraud in Bangladesh banks by the researcher. The
framework is purely developed for this research paper and has not been adopted elsewhere.
3.2 Research Hypotheses

Based on the above research discussion and research framework development the following
hypotheses have been developed;
H1 H01 There is no relationship between credit card frauds and internal control system in
the banking industry of Dhaka, Bangladesh.
HA1 There is a relationship between credit card frauds and internal control system in
the banking industry of Dhaka, Bangladesh.
H2 H02 There is no relationship between credit card frauds and audit procedure in the
banking industry of Dhaka, Bangladesh.
HA2 There is a relationship between credit card frauds and audit committee in the
banking industry of Dhaka, Bangladesh.
H3 H03 There is no relationship between credit card frauds and risk management
strategies in the banking industry of Dhaka, Bangladesh.
HA3 There is a relationship between credit card frauds and risk management strategies
in the banking industry of Dhaka, Bangladesh.
3.3 Research Design

In any research which is to be conducted by any researcher, it is very important before
researching for the researcher to think on how to conduct the research paper concerning the
mechanisms and structural procedure on how to conduct the research. Many of the researchers
will at many times, think of just issuing questionnaires and distributing them for data collection,
but according to Saunders, Lewis and Thornhill (2012), this is considered as the centremost item
after the indulgence of many activities. Below is what is considered as the Research Onion which
will govern the way-how this research paper will be conducted.
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This research paper is based on the positivism philosophy. The basis of action behind this
positivism philosophy is based on the deductive approach where a theory as seen in Chapter
Two: Literature Review was developed as well as a hypothesis. The research paper was
quantitative since the collected data will be numeric as well the basis for analysing the data
collected on the SPSS. The research paper is a cross-sectional type in nature as it will involve
self-administered questionnaires of 200 in number administered to its respondents in
Bangladesh; Dhaka city. The cornerstone emphasis of this research paper is to understand the
relationship between the occurrence, risks and measurers against credit card frauds in
Bangladesh. The above figure 2 shows the research onion which will gear the flow of this
research paper where the ‘onion’ will consist of categories such as research philosophy,
approach, strategy, strategy choices, time horizon, data collection and data analysis which will be
discussed later on in this chapter.
3.4 Research Philosophy

It encompasses the whole general development of knowledge and the understanding of this
knowledge (Saunders, Lewis & Thornhill, 2012). According to this research paper, positivism is
the best choice of philosophy to be adopted. This is because it believes that there is a stability in
the notion and existence of reality and as such this reality can be described in an objective nature
point of view. The observation made from such research will accredit reliable data. As such, the
research will then be forced to use existing theories to create a hypothesis as seen before Chapter
Two above under Literature Review; Fraud Triangle. Only predictions can be made from the
hypothesis developed based on researches made earlier on by previous researchers. Later on, the
hypothesis developed in this research paper will later on be tested under various statistical
analysis which will either lead to them being accepted or refuted and thus creating a new theory
to be used in future for research purposes (Saunders, Lewis & Thornhill, 2012).
3.5 Research Classification and Approaches

This research is an explanatory type of research in classification. This is because it basically and
causally brings out the discussion relationship between the variables both independent and
dependent and later on explains how these relationships affect one another in discussing the issue
of the research topic; credit card frauds in Bangladesh. According to Saunders, Lewis and
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Thornhill (2012), the research approach observant in this paper is of a deductive. This is because
the theory and hypothesis were developed as discussed at the beginning of this chapter. Under
induction, data will be collected from the research paper and a theory will later be developed
once the data has been analysed. Therefore, in a nut shell, the deductive approach set for this
paper will try to bring out a possible explanation between the research paper’s variables. This
will be possible from the created hypothesis to test on the relationship existence as well as from
the collected quantitative data.
3.6 Research Strategy

Generally, according to Saunders, Lewis and Thornhill (2012), the research strategy will be a
derivation from the researcher’s research questions and objectives, the existing compounded
knowledge as well as the time lapse stretched to cover the research paper. Under this research
paper, a survey will be the best fit research strategy in collecting the need data. This is because
surveys are closely associated with the deductive approach (Saunders, Lewis & Thornhill, 2012).
This survey strategy will answer the W/H questions posed by the research question of this paper.
3.7 Research Choices

Since this research paper is based on the analogy that there will be a conducted survey and data
will be collected the preferred research choice will be a quantitative type. Quantitative research
is the best fit choice since it is based on the numerical data generation. It makes use of a variety
of quantitative analysis techniques that range from providing simple descriptive of the variables
involved, in establishing statistical relationships among variables through complex statistical
modelling (Saunders, Lewis & Thornhill, 2012). The quantitative research for this paper is to
bring out the relationship between the studied variables both dependent and independent in a
studied population of 200 respondents in Bangladesh.
3.8 Data Collection

Since these research papers try to bring about an explanation between two variables, it will be
based on a collection of data from distributed questionnaire thus, the research is entire of primary
data basis. The researcher himself will conduct the questionnaire distribution where the research
will eventually be explanatory as it will ultimately bring about an explanation between the
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existing and non-existing relationship between the tested independent and dependent variables
(Saunders, Lewis & Thornhill, 2012).
3.9 Instrumentation
The questionnaire will be self-administered in Dhaka city in Bangladesh. This is because doing
as such will be the most convenient and inexpensive way to collect the data needed. Moreover, it
will also increase the chances of reduced biasness as well as increasing anonymity which is very
essential in excising opinion needed for this research paper. The data collected in Dhaka city will
later on be generalised as an extended characteristic for the entire country as a feedback to the
topic of discussion. There shall be two distinctive features of this designed questionnaire. It will
constitute of part A; demographic characteristic and part B, testing on the relationship between
the independent variable and dependent variable. The questions will be self-generated since no
previous research has been conducted before to test the nature of the designed topic. Questions
asked to respondents in section B will be of Linkert type in nature where five proposed choice
answers will be provided for to the respondents (see a copy of questionnaire attached on
Appendix). A total of 200 questionnaires will be physically distributed and collected as well
3.10 Sampling
Because organizing data from few data entries is more manageable as well as because of
limitation of time as a barring factor in conducting this research paper, collecting data from a
sample basis is very practical (Saunders, Lewis & Thornhill, 2012). Non-probability type of
sampling are used for this research paper and the number of sample respondents (200) was
generated by using Raosoft calculator. Haphazard sampling or also known as convenience type
of sampling was used for this research paper as this is very fit especially when the time is of the
essence and also the variables are independent of each other.
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3.11 Research Analysis
3.11.1 Frequency Descriptive Statistics Analysis

Descriptive analysis is the basic analytical method of entered data in SPSS. In order to feel the
descriptive nature of the research paper, frequency table were produced using SPSS version 24
for responses under each question. The frequency table contains actual percentage and
accumulated percentage. The actual percentage indicates the ratio of the majority and minority
respondents.
3.11.2 Reliability Analysis of the Questionnaire

Reliability indicates that the scores of an instrument are stable and consistent (Mohamad et al.,
2015). Reliability analysis measures the ability of a questionnaire or instrument to consistently
measure the objectives of the study. In this study Cronbach’s alpha has been used to analyse the
reliability of the questionnaire which can be expressed in numbers in between 0 (zero) and 1
(one). The values between 0 and 1 can further be categorized into several measurement points.
For example, if the value is above 0.94, the reliability can be denoted as ‘Excellent’ (see Figure 3
below). In this study, any values above 0.70 is regarded as reliable, stable and acceptable.
Figure 3: Rating Scale of Reliability Analysis
Source: Mohamad et al. (2015)
3.11.3 Normality Analysis

Normality analysis helps to identify and assess whether the data sets are normally distributed
which means, how significantly identical the sample data with normal population (Singh &
Masuku, 2014). In this study, the Shapiro-Wilk (S-W) test has been used which predicts that the
significance level should be above 0.05 for the data to be normally distributed. However, with
large sample data like over 40 responses, violation of this normality rule can be neglected
(Ghasemi & Zahediasl, 2012). Moreover, rather than analysing a histogram, the Z-Scores in the
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S-W test has been considered in this study. The Z-Score value of skewness and kurtosis should
be in between -1.96 and +1.96 for the data to be normally distributed. Formula for Z-Scores are:
𝑆𝑡𝑎𝑡𝑖𝑠𝑡𝑖𝑐𝑎𝑙 𝑣𝑎𝑙𝑢𝑒 𝑜𝑓 𝑠𝑘𝑒𝑤𝑛𝑒𝑠𝑠−0 𝑆𝑡𝑎𝑡𝑖𝑠𝑡𝑖𝑐𝑎𝑙 𝑣𝑎𝑙𝑢𝑒 𝑜𝑓 𝐾𝑢𝑟𝑡𝑜𝑠𝑖𝑠−0

𝑍𝑠𝑘𝑒𝑤𝑛𝑒𝑠𝑠 = and 𝑍𝑐𝑢𝑟𝑡𝑜𝑠𝑖𝑠 =
𝑆𝑡𝑎𝑛𝑑𝑎𝑟𝑑 𝑒𝑟𝑟𝑜𝑟𝑠 𝑜𝑓 𝑠𝑘𝑒𝑤𝑛𝑒𝑠𝑠 𝑆𝑡𝑎𝑛𝑑𝑎𝑟𝑑 𝑒𝑟𝑟𝑜𝑟𝑠 𝑜𝑓 𝐾𝑢𝑟𝑡𝑜𝑠𝑖𝑠
3.11.4 Bivariate Pearson Correlation Analysis

Bivariate correlation test is the most commonly used tool to analyse the correlation between two
variables. There are various types of methods for conducting a bivariate correlation tests. Among
those, the Pearson method has been considered with ‘two-tailed’ significance test. In order to
carry out this analysis, each relevant question under the corresponding independent variables
have been converted (grouped) to a single variable. Thus, instead of a total of 24 questions
(excluding the demographics), only four (4) variables were produced based on the MEAN
statistical component in the SPSS version 24. The grouped variables, were then combined in the
Bivariate Pearson Correlation Analysis. The findings are described in Section 5.3.
3.11.5 Multiple Linear Regression Analysis

Besides the correlation analysis, multiple leaner regression analysis has also been carried out.
The multiple linear model is used when there are two or more independent variables available
aiming to have a linear relationship with the dependent variable. Similar to the correlation
analysis, in the regression analysis as well, the grouped data have been used. The grouped
variables (three independent variables and one dependent variable) were inserted in the Multiple
Linear Regression analysis tool of the SPSS version 24. There were three outputs of the test in
table form, namely, R Square table, ANOVA table and Coefficient table which have been
presented with discussion on the analysis.
3.12 Ethical Considerations

In this research, some key ethical considerations related to the privacy of possible and actual
participants voluntary nature of participation and the right to withdraw partially or completely
from the process, consent and possible deception of participants and maintenance of the
confidentiality of data provided by individuals or identifiable participants and their anonymity.
In this research, nothing will be done that cause physical or emotional harm to the respondents.
This could be something as simple as being careful how you word sensitive or difficult questions
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CHAPTER 4
FINDINGS AND DISCUSSION
4.0 Introduction
This chapter presents the findings of the study that have been obtained using structured
questionnaire from the respondents and later processed through statistical software, SPSS version
24. In presenting the findings, all the responses in group of each question have been described
using frequency table and corresponding discussion. Moreover, pie-chart are also used with
regards to the demographic factors of the respondents.
4.1 Demographic Profile (Descriptive Analysis of Personal Data):

This is the first section in the survey questionnaire aiming to find the demographic factors of the
respondents. The demographic factors considered in this study include gender, age, marital
status, education level, job position, income level and years of experience.
4.1.1 GENDER
Referring to the pie-chart and the frequency table on top, 54.4 percent of the respondents were
male followed by 45.6 percent female respondents. This finding indicates that there is no
significant gender inequality in the collection of this study’s data. Nevertheless, not only male,
female bankers also were almost equally interested in responding to the questionnaire.
Gender
46% Male
54% Female
Figure1: Gender of the Responds
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Table 1: Gender of the Respondents
Frequency Percent Valid Percent Cumulative Percent

Valid Female 31 45.6 45.6 45.6
Male 37 54.4 54.4 100.0

Total 68 100.0 100.0
4.1.2 AGE
It was found that majority of the respondents (44 percent) are above 30 years old followed by
33.8 percent aged between 25 and 30 years. 20.6 percent others are between 20 and 24 years old.
Hence, majority of the respondents are matured and fall in the Millennials and Generation X
categories.
Age
1%
21% 20-24 years

25-30 years
44%
Above 30 years
34% Below 20 years
Figure 2: Age of the Responds
Table 2: Age of the Respondents

Valid 20 - 24 years 14 20.6 20.6 20.6
25 - 30 years 23 33.8 33.8 54.4
Above 30 years 30 44.1 44.1 98.5
Below 20 years 1 1.5 1.5 100.0
Total 68 100.0 100.0
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4.1.3 MARITAL STATUS

It was found that majority of the respondents are either married or divorced. Among them
married bankers account for almost 62 percent. Moreover, 32.4 percent of respondents were
found as unmarried. The outstanding 6 percent commented as divorced.
Marital Status
6%
32% Divorced
Married
62% Unmarried
Figure 3: Marital Status of the Responds
Table 3: Marital Status of the Respondents
Frequenc Valid Cumulative

y Percent Percent Percent
Valid Divorced 4 5.9 5.9 5.9
Married 42 61.8 61.8 67.6
Unmarrie 22 32.4 32.4 100.0
d
Total 68 100.0 100.0
4.1.3 EDUCATION LEVEL
All the respondents were found as well-educated and studied in a higher educational institution.
Especially, majority of the respondents at 42.6 percent have higher degrees like Masters. Further
11.8 percent have PhD degree. A considerable percentage of the respondents (34 percent) have
Bachelor degree. From these findings, it can be inferred that all the respondents consciously
responded to the questionnaire.
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Education Level
12%
Degree
34%
Diploma
Master
42% PhD
12%
Figure 4: Education Level of the Respondents
Table 4: Education Level of the Respondents
Frequenc Valid Cumulative

y Percent Percent Percent
Valid Degree 23 33.8 33.8 33.8
Diploma 8 11.8 11.8 45.6
Master 29 42.6 42.6 88.2
PhD 8 11.8 11.8 100.0
Total 68 100.0 100.0
4.1.5 Designation
The designation of the respondents was also inquired. Majority of the respondents (43 percent)
are Senior Officer with further 13 percent in the Top Management. It reflects the finding
regarding their educational level that they hold either Masters or PhD degree as found in the
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previous question. Moreover, 28 percent of the respondents were Junior Officer with 13 percent
more as Management Trainee (see the pie-chart on right and the frequency table on the next
page).
Designation
16%
28% Junior Officer
Management Trainee
Senior Officer
13% Top Management
43%
Figure 5: Designation of the Respondents
Table 5: Designation of the Respondents
Frequen Percen Valid Cumulative

cy t Percent Percent
Vali Junior Officer 19 27.9 27.9 27.9
d Management 9 13.2 13.2 41.2
Trainee
Senior Officer 29 42.6 42.6 83.8
Top 11 16.2 16.2 100.0
Management
Total 68 100.0 100.0
4.1.6 Income Level

The findings with regards to the respondents’ income level are consistent with their designation.
As 16.2 percent are in the Top Management, they are paid the highest salary at above BDT
81,000. However, majority of the respondents (43 percent) who are Senior Officer receive a
monthly salary of BDT 51,000 to BDT 80,000. Further 28 percent who commented that they are
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Junior Engineer are paid between BDT 31,000 and BDT 50,000. The Management Trainee who
are accounted for 13 percent of the respondents receive the lowest salary range between BDT
10,000 and BDT 30,000
Income Level (in BDT)
16% 13%
10000 - 30000
. 31000 - 50000
28% 51000 - 80000
Above 81,000
43%
Figure 6: Income Level of the Respondents
Table 6: Income Level of the Respondents
Valid Cumulative
Frequency Percent Percent Percent
Valid 10 - 30 Thousand 9 013.2 13.2 13.2
31 - 50 Thousand 19 27.9 27.9 41.2
51 - 80 Thousand 29 42.6 42.6 83.8
Above 81 11 16.2 16.2 100.0
Thousand
Total 68 100.0 100.0
4.1.7 YEARS OF EXPERIENCE

The findings in this regard are also consistent with the designation and income level of the
respondents. For instance, 43 percent who are Senior Officer said their experience is between 5
and 10 years. 16.2 percent who are Top Manager have experience over 10 years which is logical.
The Junior Officer have 3-5 years of experiences who hold 28 percent of the respondents.
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However, a small number of employee (16 percent) who are management trainee have below 2
years of experience (see the frequency table and pie-chart below).
These findings indicate that majority of the respondents are permanent employees of the bank
with over 5 years of experience (considering the percentage of those responsible as Manager and
Senior Officer).
Years of Experience
16%
28% 3 - 5 Years
13% 5 - 10 Years
Below 2 Years
Over 10 Years
43%
Figure 7: Years of experience of the Respondents
Table 7: Years of experience of the Respondents

Valid 3 - 5 years 19 27.9 27.9 27.9
5 - 10 years 29 42.6 42.6 70.6
Below 2 9 13.2 13.2 83.8

years
Over 10 11 16.2 16.2 100.0
years
Total 68 100.0 100.0
4.1.8 Internal Control Systems at the Bank
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‘Internal control systems’ is one of the independent variables of this study. This section aims to
examine the availability and adequacy of internal control systems in support of the credit card
fraud prevention in the bank. The respondents were inquired to rate their perception on the
adequacy of the awareness of the bank management regarding credit card frauds. Majority of the
respondents disagreed to the statement which indicate that the management is not adequately
aware about credit card frauds yet. 42.6 percent of respondents disagreed followed by 22 percent
being strongly disagreed (refer to the frequency table below).
Table 8: Awareness level of the Management regarding credit card frauds

Valid Strongly Agree 3 4.4 4.4 4.4
Agree 10 14.7 14.7 19.1
Neutral 11 16.2 16.2 35.3
Disagree 29 42.6 42.6 77.9
Strongly Disagree 15 22.1 22.1 100.0
Total 68 100.0 100.0
4.1.9 Attitude of management towards prevention of credit card frauds

Comparing the total agreed and disagreed responses, majority of the responds disagreed to the
statement. About 31 percent disagreed followed by further 14.7 percent who strongly disagreed.
However, 20.6 percent agreed and 10.3 percent strongly agreed. 23.5 percent of the respondents
remained neutral (see the frequency table on the next page). Though the findings do not provide
a certain indication, it can be inferred that the management does not have a positive attitude
towards prevention of credit card frauds that is visible to all the respondent bankers.
Table 9: Attitude of management towards prevention of credit card frauds

Agree 14 20.6 20.6 30.9
Neutral 16 23.5 23.5 54.4
Disagree 21 30.9 30.9 85.3
Total 68 100.0 100.0
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4.1.10 Ethical behaviours and values of the management and the staffs of the bank that
limit credit card frauds
In this context as well, the responses are ambiguous regarding the perception of the respondents
on whether the ethical values and behaviours of the management and the staffs at the bank limit
credit card frauds. Though about 26.5 percent disagreed followed by 11.8 percent being strongly
disagreed and 31 percent remained neutral, a considerable percentage (around 31 percent) of the
respondents are of the view that there is a lack of ethical value and behaviours displayed by the
management and staffs in favour of credit card frauds prevention.
Table 10: Ethical behaviours and values of the management and the staffs of the bank that
limit credit card frauds

Agree 14 20.6 20.6 30.9
Neutral 21 30.9 30.9 61.8
Disagree 18 26.5 26.5 88.2
Strongly 8 11.8 11.8 100.0
Disagree
Total 68 100.0 100.0
4.1.11 Adequacy of actions taken by the management to prevent credit card frauds
Majority of the respondents disagreed to this statement (50 percent) which reveals that the
actions taken by the management at the bank so far are not adequate for preventing credit card
frauds. It also indicates that the management lacks a credible and functioning credit card frauds
prevention mechanism. Further 17.6 percent strongly disagreed to the statement, making the
disagreement even stronger perception (frequency table on the next page). Probably the amount
of actions taken so far could not adequately eliminate the issue with credit card frauds or those
were very limited.
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Table 11: Adequacy of actions taken by the management to prevent credit card frauds

Agree 10 14.7 14.7 16.2
Neutral 11 16.2 16.2 32.4
Disagree 34 50.0 50.0 82.4
Total 68 100.0 100.0
4.1.12 Regular review of the internal controls by the management
The respondents were also asked whether the management regularly review the internal controls
such as the management’s attitude, goals, strategies, actions and performances in order to
improve further. Majority of the respondents (44 percent) disagreed with further 28 percent who
strongly disagreed to the statement. It indicates that either (a) the review process takes place only
once a year instead of quarterly or monthly, or (b) there is no review process at all, or (c) the
current review process practice does not help in the improvement of overcoming the fraud issues.
Table 12: Regular review of the internal controls by the management

Agree 7 10.3 10.3 16.2
Neutral 8 11.8 11.8 27.9
Disagree 30 44.1 44.1 72.1
Total 68 100.0 100.0
Management can override the internal control systems at the bank both in positive and negative
ways. However, the override would limit successful implementation of credit card fraud
prevention mechanism only if, the management takes biased decision or displays unethical
values and behaviours. Majority of the respondents agreed that management override in their
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banks limits successful implementation of credit card frauds prevention system. 53 percent of the
respondents agreed and further 33.8 percent strongly agreed to the statement.
Table 14: Management over-ride of internal controls limit successful implementation of credit
card fraud prevention system

Agree 36 52.9 52.9 86.8
Neutral 8 11.8 11.8 98.5
Disagree 1 1.5 1.5 100.0
Total 68 100.0 100.0
4.1.3 Audit Procedure at the Bank

Audit procedure is one of the independent variables of the study that is perceived to affect the
credit card frauds in banking sector. The respondents were asked whether according to their
opinion, the bank has an internal audit procedure to regularly monitor credit card frauds. 42.6
percent of the respondents disagreed with further 29.4 percent strongly disagreed. The findings
reveal that the current internal audit procedure is followed only once a year rather than following
frequently to monitor credit card frauds (see Table 15).
Table 15: Availability of regular internal audit procedure for monitoring credit card frauds

Valid Agree 9 13.2 13.2 13.2
Neutral 10 14.7 14.7 27.9
Disagree 29 42.6 42.6 70.6
Total 68 100.0 100.0
Majority of the respondents acknowledged the current inadequacy of the knowledge that their in-
bank internal auditors have to effectively detect the different types of techniques used by hackers
in committing credit card frauds. About 53 percent of the respondents disagreed with 17.6
percent more strongly disagreed to the statement that the auditors have sufficient knowledge to
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detect the techniques (see Table 16). The findings indicate that the internal auditors are not
competent enough with regards to credit card fraudulent issues.
Table 16: Adequacy of the internal auditor’s knowledge in detecting different credit card fraud
techniques

Valid Agree 6 8.8 8.8 8.8
Neutral 14 20.6 20.6 29.4
Disagree 36 52.9 52.9 82.4
Total 68 100.0 100.0
Majority the respondents again acknowledged the poor competency of the internal auditors in
their banks. 44.1 percent of the respondents disagreed while 23.5 percent more strongly
disagreed. It indicates that the internal auditors in the banks are not competent enough to
evaluate the indicators of the credit card frauds. It also reflects, whether a credit card fraud was
caused due to hackers’ expertise or the customers’ fault or the managerial issues. Hence, the
actual causes or the factors of credit card frauds may not be apparently available to the top
management to understand the fraudulent cases and the necessary actions to be taken.
Table 17: Evaluation of the indicators of credit card frauds performed by the internal auditors

Valid Agree 13 19.1 19.1 19.1
Neutral 9 13.2 13.2 32.4
Disagree 30 44.1 44.1 76.5
Total 68 100.0 100.0
Majority of the respondents were neutral with regards to this question. It may mean that either
the respondent were unsure or ignorant about the context. However, 23.5 percent disagreed to the
statement that the auditors actually recommend any further action or strategy to the management.
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Moreover, 17.6 percent strongly disagreed which constitutes 41 percent of the respondents who
were perceived adversely (refer to the frequency table on the next page).
Table 18: Further actions and strategies recommended by the auditors to the management

Agree 13 19.1 19.1 26.5
Neutral 22 32.4 32.4 58.8
Disagree 16 23.5 23.5 82.4
Total 68 100.0 100.0
In this context, however, majority of the respondents (about 40 percent) agreed to the statement
that the internal auditors have the capacity and competencies to address the credit card frauds
faced by the customers. However, 26.5 percent of the respondents disagreed indicating that the
internal auditors are unable to address the credit card frauds faced by the customers.
Table 19: Addressing of credit card frauds by the internal auditors

Agree 27 39.7 39.7 47.1
Neutral 10 14.7 14.7 61.8
Disagree 18 26.5 26.5 88.2
Total 68 100.0 100.0
The respondents were asked whether the internal auditors are provided with any orientation
course on digital forensic accounting. 26.5 percent strongly disagreed with further 35.3 disagreed
in general. This finding explains why the internal auditors have lack of knowledge and are not
able to evaluate the indicators of both past and prospective credit card frauds cases. It also
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explains that the current orientation course structure lacks a digital forensic accounting that helps
in understanding and preventing credit card fraudulent cases.
Table 20: Orientation program provided with internal auditors

Agree 13 19.1 19.1 23.5
Neutral 10 14.7 14.7 38.2
Disagree 4 35.3 35.3 73.5
Total 68 100.0 100.0
4.1.4 Risk Management Strategies at the Bank

This is the third independent variable of the study that aims to assess whether the banks have
effective risk management strategies to prevent credit card frauds. Risks may include financial
risks, market risks and security risks. Risk management strategies include educating customers,
introducing technologies, multiple identification features and updated security measures.
Furthermore, identification and evaluation of the risks are also important issues. Majority of the
respondents (48.5 percent) agreed to the statement, acknowledging that the bank has the
corresponding ability. Moreover, 10.3 percent respondents strongly agreed to the statement. It
indicates that the respondents’ banks though are not able to identify the causes of credit card
frauds (found earlier), they are yet able to identify the risks that may be associated with credit
card frauds.
Table 21: Ability of the bank to identify the risks related to credit card frauds
Agree 33 48.5 48.5 58.8
Neutral 13 19.1 19.1 77.9
Disagree 13 19.1 19.1 97.1
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Total 68 100.0 100.0
This question examines the banks’ ability in evaluating the risks related to credit card frauds.
Majority of the respondents (35.3 percent) disagreed to the statement with further 17.6 percent
strongly disagreed. The findings reveal that there is a gap between the ability of the banks in
identifying the risks as well as evaluating the risks.
Table 22: Ability of the bank to effectively evaluate the risks related to credit card frauds
Agree 10 14.7 14.7 25.0
Neutral 15 22.1 22.1 47.1
Disagree 24 35.3 35.3 82.4
Total 68 100.0 100.0
Customer education can be one of the risk management strategies. The respondents were asked
whether the respective banks educate their customers on how to be safe from credit card fraud
cases. Majority of respondents agreed to the statement that their banks provide customer
education from time to time as 36.8 percent agreed and 13.2 percent of the respondents strongly
agreed. It indicates that the banks are vibrant in customer engagement.
Table 23: Provision of customer education by the bank to keep them safe

Agree 25 36.8 36.8 50.0
Neutral 26 38.2 38.2 88.2
Disagree 4 5.9 5.9 94.1
Total 68 100.0 100.0
Majority of respondents denied that their banks did not yet adopt modern technologies in the
design of credit cards. For instance, 42.6 percent disagreed followed by 25 percent strongly
disagreed. It may indicate that (a) the banks rather use old technologies in the design of credit
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cards are, making it vulnerable for hacking and susceptible to frauds; and (b) probably the
utilization of modern technologies has not been in large-scale.
Table 24: Adoption of modern technologies by the bank in the design of credit cards

Agree 8 11.8 11.8 14.7
Neutral 12 17.6 17.6 32.4
Disagree 29 42.6 42.6 75.0
Total 68 100.0 100.0
Multiple identification features may include face recognition, finger prints recognition or even
eye recognition. These features improve the security of credit cards and act as strong barriers
against hackers. Majority of the respondents further denied any such adoption of multiple
identification features by their banks to counter possible frauds. 36.8 percent disagreed while
41.2 percent strongly disagreed. It reveals that the banks have employed no such features,
indicating poor risk management strategies by the banks.
Table 25: Adoption of multiple identification features by the bank prevent fraudulent usage of
credit cards

Valid Agree 2 2.9 2.9 2.9
Neutral 13 19.1 19.1 22.1
Disagree 25 36.8 36.8 58.8
Total 68 100.0 100.0
The respondents were also inquired whether their banks regularly update the security features.
Majority of the respondents disagreed to statement, implying that the banks do not regularly
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update security features. Probably this is one of the major reasons why the banking industry has
been experiencing credit card fraud cases. 36.8 percent of the respondents disagreed while
further 22 percent strongly disagreed.
Table 26: Regular update of security features by the bank

Agree 9 13.2 13.2 16.2
Neutral 17 25.0 25.0 41.2
Disagree 25 36.8 36.8 77.9
Total 68 100.0 100.0
4.1.5 Credit card frauds prevention mechanism in the banking industry

This is the dependent variable of the study and aims to find the extent to which the investigated
banks are being exposed to credit card frauds and whether the current fraud prevention
mechanism needs further improvement. Majority of the respondents acknowledged that credit
card frauds are frequent issues and their banks often experience complaints from credit card
holders on frauds and fund hijack. About 53 percent of the respondents agreed to the statement
while 25 percent more strongly agreed.
Table 27: Frequent experience of credit card frauds by the bank

Agree 36 52.9 52.9 77.9
Neutral 12 17.6 17.6 95.6
Total 68 100.0 100.0
Majority of the respondents agreed to this statement, acknowledging that credit card frauds are
one of the major frauds experienced by their banks as 41.2 percent agreed with 38.2 percent
strongly agreed. Thus, it is one of the major concerns at present in the investigated banks.
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Table 28: Is credit card fraud one of the major frauds experienced by the bank?

Agree 28 41.2 41.2 79.4
Neutral 6 8.8 8.8 88.2
Disagree 5 7.4 7.4 95.6
Total 68 100.0 100.0
Credit card frauds may occur very rapidly as hackers electronically transfer bulk amount of funds
from the card holders’ account to their personal account. Since the banks face frequent
fraudulent cases, it is reasonable that the banks would face significant monetary losses from the
frauds. Majority of the respondents disagreed (42.6 percent) while about 31 percent strongly
agreed to the statement.
Table 29: Significant financial losses caused by credit card frauds

Agree 29 42.6 42.6 73.5
Neutral 9 13.2 13.2 86.8
Disagree 5 7.4 7.4 94.1
Total 68 100.0 100.0
As the banks lack multiple identification features, modern technologies, security measures and
regular audit procedure, they are supposed to have lack of tools to detect credit card frauds
effectively. As also found in the findings (see the frequency table below), about 53 percent
strongly agreed to the statement and about 28 percent more of the respondent agreed that their
bans lack required tools to detect the frauds.
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Table 30: Availability of tools to effectively detect credit card frauds

Agree 19 27.9 27.9 80.9
Neutral 7 10.3 10.3 91.2
Disagree 6 8.8 8.8 100.0
Total 68 100.0 100.0
The respondents were further asked whether the fraud prevention system at their banks can
adequately address the credit card frauds. It was found that 50 percent of the respondents
disagreed to the statement while 22 percent strongly disagreed. The findings reveal the poor state
of the fraud prevention system at the bank.
Table 31: Ability of the existing fraud prevention system in addressing credit card frauds

Agree 7 10.3 10.3 11.8
Neutral 11 16.2 16.2 27.9
Disagree 34 50.0 50.0 77.9
Total 68 100.0 100.0
Almost all the respondents unanimously agreed to the view that the technologies used by their
banks in design and management of credit cards need more improvement. 67.6 percent of the
respondents strongly agreed and about 28 percent disagreed. Since the banks lack using modern
technologies, it is a fair and honest opinion from them.
Table 32: The need to improve the technologies used in the credit cards
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Agree 19 27.9 27.9 95.6
Neutral 3 4.4 4.4 100.0
Total 68 100.0 100.0
4.2 Chapter Summary

This chapter presented the findings of the study in terms of percentage and frequency table.
Firstly, the demographics of the respondents have been presented. The findings reveal that
majority of the respondents are married, university graduate, senior officer, with over 5 years of
experience and paid BDT 51,000 and above. The ratio among the male and female respondents
are almost equitable. Most of the respondents also fall in either Millennials or Generation X.
The next three sections examined effect of the three independent variables on credit card fraud
prevention. With regards to the first independent variable (internal control systems), the findings
reveal that the management attitude, ethical values and actions are not supportive to prevention
of credit card frauds due to management override of the internal controls. The findings regarding
the second independent variable (internal audit procedure) show that the internal auditors are not
competent enough to effectively audit the frauds nor they are provided with required course and
training. Moreover, the audit procedure is irregular, taking place only once a year probably.
In terms of the third independent variable (risk management strategies), the bank is though able
to address the risks, yet not able to evaluate the risks related to credit card frauds. The bank is
found to have been good with provision of customer education. However, the lack of modern
technologies is prevalent. Finally, the respondents perceived that their banks often experience
credit card frauds and are exposed to significant monetary losses. The banks also lack tools to
detect possible frauds and the current technologies in credit cards need more improvement.
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CHAPTER 5
DATA ANALYSIS AND INTERPRETATION
5.0 Introduction
This chapter commences with the reliability analysis of the questionnaire of the study. The
subsequent sections include interpretation of the study findings though hypotheses testing
techniques. Hypotheses tests have been done using three separate tests, namely, Normality
analysis, Bivariate Pearson Correlation analysis and Multiple Linear Regression analysis. The
results of the tests are taken into account to eventually conclude whether there is relationship
among the independent variables and the dependent variable.
5.1 Reliability Analysis of the Questionnaire
The reliability analysis is conducted only for the questions relevant to the independent variables
and the dependent variable. Therefore, questions related to the demographics of the respondents
were kept out of consideration. Each of the variables contain 6 questions and therefore, all the
grouped questions were analysed through Reliability Statistics tool in the SPSS. It was found that
the value of Cronbach’s Alpha for three variables are above 0.70 namely, audit procedure, risk
management strategies and credit card fraud prevention mechanism. Hence, the question under
these three variables can be regarded as reliable and acceptable. However, with regards to
internal control systems, the Cronbach’s Alpha value is found below 0.70 at 0.593. This indicates
apparently unreliable instrumentation. However, since the number of sample respondents were
68 which is above 40, the unreliability of the questions can be neglected.
Table 33: Outputs of Reliability Analysis of the Questionnaire
Variables N of Items Cronbach's Alpha
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Internal Control Systems 6 .593

Audit Procedure 6 .864
Risk Management Strategies 6 .733
Credit Card Fraud Prevention Mechanism 6 .841
5.2. Normality Analysis
The normality analysis is conducted using two methods. Firstly, the Z-Scores values of
Skewness and Kurtosis were calculated. In order to produce the values, all the four variables
(grouped variable) were analysed using Descriptive tool in the SPSS against Skewness and
Kurtosis. The outputs provided segmented values of both Skewness and Kurtosis in terms of
Statistical value and Standard error (see Table 34). Using the following formula, the Z-Scores
value of Skewness and Kurtosis for each variable were manually calculated which are provided
in the last two columns of the Table 34.
𝑆𝑡𝑎𝑡𝑖𝑠𝑡𝑖𝑐𝑎𝑙 𝑣𝑎𝑙𝑢𝑒 𝑜𝑓 𝑠𝑘𝑒𝑤𝑛𝑒𝑠𝑠−0

𝑍𝑠𝑘𝑒𝑤𝑛𝑒𝑠𝑠 =
𝑆𝑡𝑎𝑛𝑑𝑎𝑟𝑑 𝑒𝑟𝑟𝑜𝑟𝑠 𝑜𝑓 𝑠𝑘𝑒𝑤𝑛𝑒𝑠𝑠
𝑆𝑡𝑎𝑡𝑖𝑠𝑡𝑖𝑐𝑎𝑙 𝑣𝑎𝑙𝑢𝑒 𝑜𝑓 𝐾𝑢𝑟𝑡𝑜𝑠𝑖𝑠−0
𝑍𝑐𝑢𝑟𝑡𝑜𝑠𝑖𝑠 =
𝑆𝑡𝑎𝑛𝑑𝑎𝑟𝑑 𝑒𝑟𝑟𝑜𝑟𝑠 𝑜𝑓 𝐾𝑢𝑟𝑡𝑜𝑠𝑖𝑠
Referring to the table below, the Z-Scores of Skewness and Kurtosis for all the variables are
within the range of -1.96 and +1.96 which means the sample data for all the four variables are
normally distributed and closely associated with the normal population.
Table 34: Descriptive Analyses of the Variables (Skewness and Kurtosis)
N Skewness Kurtosis Z-Scores Z-Scores
Statistic Statistic Std. Statistic Std. Skewness Kurtosis

Error Error
Internal Control_ 68 .132 .291 -.659 .574 .045 -1.148
Systems
Audit Procedure 68 .170 .291 .562 .574 .584 .979
Risk Management_ 68 .362 .291 .797 .574 1.244 1.389
Strategies
Creditcard_Fraud_ 68 .226 .291 .511 .574 .776 0.890
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Prevention Mechanism
Valid N (list wise) 68
Furthermore, in case of the Shapiro-Wilk test, the significance level for all the variables were
found above 0.05 which indicate that the sample data are normally distributed about the mean
(see Figure 35 below).
Table 35: Outputs of Normality Tests (Shapiro-Wilk)
Tests of Normality
Shapiro-Wilk
Statistic Df Sig.
Internal_Control_Systems .926 9 .073
Audit_Procedure .959 9 .171
Risk_Management_Strategies .932 9 .165
Creditcard_Fraud_Prevention_Mechanism .984 9 .296
5.3 Bivariate Pearson Correlation Analysis

Bivariate Pearson Correlation analysis examines the correlation of all the independent variables
with thee dependent variables. This correlation technique can be one-tailed or two-tailed.
However, in this context, the two-tailed analysis is conducted. In order to reject the null
hypotheses, the value of significance level between an independent variable and a dependent
variable must be zero which would prove a correlation or causality effect between the variables
statistically. However, if the significance level is found more than 0.05, it would be regarded as
statistically no correlation or causality effect.
Referring to the correlation table below, the ‘red oval-shaped’ numbers indicate the significance
level of each independent variable with the dependent variable. With regards to the first variable,
the significance level of 0.112 indicates that there is no correlation between internal control
systems and credit card fraud prevention mechanism. The association Pearson Correlation
coefficient of (-) 0.053 shows that the correlation is negative and weaker.
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Furthermore, the significance level of the second independent variable, audit procedure, is 0.000
which is less than 0.05 and the correlation is significant at 0.01 level between audit procedure
and credit card fraud prevention mechanism. The associated Pearson Correlation coefficient of
0.695 indicates that the correlation is stronger.
In case of the third independent variable, risk management strategies, the significance level is
also below 0.05. Besides, the correlation is significant at 0.01 level between risk management
strategies and credit card fraud prevention mechanism. The associated Pearson Correlation
coefficient of 0.583 indicates that the correlation is stronger.
Table 36: Outputs of the Bivariate Pearson Correlation analysis
Credit_Card Internal_ Audit_ Risk_

_Fraud_ Control_ Procedure Management_
Prevention_ Systems Strategies
Mechanism
Credit_Card_Fra Pearson Correlation 1 -.053 .695** .583**
ud_ Prevention_ Sig. (2-tailed) .112 .000 .000
Mechanism N 68 68 68 68
Internal_Control Pearson Correlation -.053 1 -.178 -.143
_ Systems Sig. (2-tailed) .112 .082 .063
N 68 68 68 68
**
Audit_Procedure Pearson Correlation .695 .178 1 .461**
Sig. (2-tailed) .000 .082 .000
N 68 68 68 68
** **
Risk_Manageme Pearson Correlation .583 -.143 .461 1
nt_Strategies Sig. (2-tailed) .000 .063 .000
N 68 68 68 68
**. Correlation is significant at the 0.01 level (2-tailed).
5.4 Multiple Linear Regression Analysis

Multiple linear regression analysis examine not only the significance level between two
variables, but also shows the regression relationship in terms of variation. The analysis has three
output tables; namely, Model Summary, ANOVA and Coefficients. The Model Summary table
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displays R Square value that shows the percentage of variation. The ANOVA table shows the
generic significance level and the Coefficients table contains separate significance level for each
independent variable.
Referring to the multiple linear regression outputs provided below, the Model Summary includes
R Square value of 0.627 which means 62.70 percent of variation in credit card fraud prevention
mechanism can be explained by internal control systems, audit procedure and risk management
strategies. In another way, 62.70 of the variability of credit card fraud prevention mechanism
accounts for internal control systems, audit procedure and risk management strategies in general.
The ANOVA table shows the significance level of 0.000 which means in general, a correlation
exists among the independent variables and the dependent variable. The third table, Coefficients
table shows that in the column of ‘significance level’, the significance level of internal control
systems is more than 0.05 at 0.127 whereas the significance level of the remaining two
independent variables (audit procedure and risk management strategies) are below 0.05 at 0.000,
indicating a significant causality effect. These findings are consistent with the output of bivariate
Pearson correlation analysis findings.
Table 37: Model Summary (Multiple Linear Regression analysis)
Model R R Square Adjusted R Square Std. Error of the Estimate

a
1 .593 .627 .613 .35641
a. Predictors: (Constant), Risk_Management_Strategies,
Internal_Control_Systems, Audit_Procedure
Table 38: ANOVAa (Multiple Linear Regression analysis)
Model Sum of Squares df Mean Square F Sig.

1 Regression 6.534 3 1.892 .098 .000b
Residual 11.348 76 .163
Total 17.418 79
a. Dependent Variable: Credit_Card_Fraud_Prevention_Mechanism
b. Predictors: (Constant), Risk_Management_Strategies, Internal_Control_Systems,
Audit_Procedure
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Table 39: Coefficientsa (Multiple Linear Regression analysis)
Model Unstandardized Standardized t Sig.

Coefficients Coefficients
B Std. Error Beta
1 (Constant) 1.862 .417 3.596 .000
Internal_Control_ -.014 .025 -.036 -.079 .127
Systems
Audit_Procedure .577 .153 .584 3.174 .000
Risk_Management_ .369 .128 .382 4.435 .000
Strategies
a. Dependent Variable: Credit_Card_Fraud_Prevention_Mechanism
5.5 Summary of the Findings from Hypotheses Tests

The findings from the above two tests reveal that the first null hypothesis is rejected whereas the
second and the third hypotheses are established. The findings in this context are clearly
illustrated in the table below.
Table 40: Summary of the Hypotheses Test Findings
Hypothesis Significance Hypotheses

Relationship Status / Causality Effect
No. Level Testing Result
1 > 0.05 The null There is no relationship between internal

hypothesis 1 is control systems and credit card prevention
established. mechanism in the banking industry of
Bangladesh.
2 < 0.05 The alternative There is a relationship between audit procedure
Hypothesis 2 is and credit card prevention mechanism in the
established. banking industry of Bangladesh.
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3 < 0.05 The alternative There is a relationship between risk

hypothesis 3 is management strategies and credit card
established. prevention mechanism in the banking industry
of Bangladesh.
5.6 Chapter Summary

This chapter explains the reliability analysis and the three hypotheses testing techniques, namely,
Normality analysis, Bivariate (two-tailed) Pearson Correlation analysis and Multiple Linear
Regression analysis. The findings in terms of the reliability analysis reveal that the instruments
are reliable, consistent and acceptable for all the variables except internal control systems.
However, as the number of sample respondents are above 40 in this study, the violation of
reliability condition can be neglected. With regards to normality analysis (Z-Scores and Shapiro-
Wilk test), all the variables were found normally distributed. However, while testing the
hypotheses through correlation and regression tools, it was found that that the alternative
hypothesis 1 is rejected. As such, there is no enough evidence of a relationship between internal
control systems and credit card prevention mechanism in the banking industry of Bangladesh.
However, the alternative hypotheses 2 and the alternative hypotheses 3 are established. Hence,
there is a statistical evidence of a relationship between audit procedure and credit card prevention
mechanism as well as risk management strategies and credit card prevention mechanism at the
banks.
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CHAPTER 6
CONCLUSION AND RECOMMENDATION
6.0 Introduction
This chapter presents a brief summary of the study objectives, methodology and findings.
Furthermore, recommendations are provided in the following section to the future researchers
and the management in the banking industry of Bangladesh. The chapter ends by highlighting the
contributions of this study and its limitations.
6.1 Conclusion
This is a quantitative study that aims to examine the factors affecting credit card frauds
prevention mechanism in the banking industry of Bangladesh. The factors that have been taken
into account in this study are internal control systems, audit procedure and risk management
strategies in the banks. In order to collect the primary data, a structured questionnaire including
31 questions was circulated to bankers of five reputed banks in the country, namely, Eastern
Bank Limited (EBL), National Credit and Commerce (NCC) Bank Limited, Dutch Bangla Bank
Limited (DBBL), Islami Bank Bangladesh Limited (IBBL) and Mercantile Bank Limited
(MBL). The questionnaire was distributed both in hardcopy and online using Google Form URL.
A total of 68 responses were received both online and on paper from the bankers of the five
banks.
The questionnaire not only explored the potential relationship between the variables, but also
inquired the demographic information of the respondents. The study findings reveal that majority
of the respondents are married, university graduate, senior officer, with over 5 years of
experience and paid BDT 51,000 and above. The ratio among the male and female respondents
are almost equitable. Most of the respondents also fall in either Millennials or Generation X in
terms of age, at over 25 years old. It indicates that the majority of the respondents are
knowledgeable about the context of the research topic and have consciously responded to the
questions.
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It was also found that the management attitude, ethical values and actions are not quite
supportive to prevention of credit card frauds due to management override of the internal
controls. The management of these banks are probably reluctant in facing the complexities
associated with credit card frauds prevention mechanism. However, the study finds no statistical
evidence to conclude that there exists a relationship between internal control systems and credit
card frauds prevention mechanism in the banking industry of Bangladesh. The non-existence of
the relationship occurred probably due to ambiguous and more neutral responses by majority of
the respondents in the context of internal control systems.
The findings of this study furthermore reveal that the auditing process in the banks are not
regular; it probably takes place only once a year. The internal auditors lack competency to
evaluate the indicators of credit card frauds, hence needed more improvement in terms of
competency. This study also finds that not all the auditors are provided with relevant course and
training on digital forensic accounting. Furthermore, sufficient statistical evidence has been
found to conclude that there is a relationship between audit procedure and credit card frauds
prevention mechanism in the banking industry of Bangladesh.
The respondents also acknowledged that though the bank is able to address the risks related to
credit card frauds, they lack successful evaluation of the risks. Moreover, modern technologies
are not being used in credit card design and management. Multiple identification features such
as, face recognition, eye recognition and fingerprints who could be alternative strategy against
credit card hackers have not yet adopted by the banks. The study finds statistical evidence that
there is a relationship between risk management strategies and credit card frauds prevention
mechanism in the banking industry of Bangladesh.
It is also perceived by the respondents that their banks often experience credit card frauds and are
exposed to significant monetary losses caused by the frauds. Moreover, the banks also lack tools
to detect possible frauds and the current technologies in credit cards need more improvement.
The overall scenario indicate that probably the credit card frauds prevention mechanism is still
immature, since the credit card banking was widely introduced only about one and half decade
ago. Thus, the competency level of the banks in Bangladesh in preventing credit card frauds
seems still below standard and it requires necessary precautions and measures to be undertaken
by the bank management, besides the customer engagement and education.
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6.2 Recommendations
6.3 Contributions of the Study

There is a need to protect the banking sector as well as the customers in the banking industry
against possible risks with their resources and money. Since banking itself is a self-sufficient
industry, it means that it is considered as one of the main national income of any country.
Therefore, there is a dire need for the banking sector to be protected against the happenings of
fraud as it will be detrimental to the overall performance of the banking industry in the long haul.
Consequently, the government will need this type of information to set up designed mechanisms
proposed by this research paper in protecting the banks against credit card frauds.
With the on-growing technological trends in the market everyday which serve as a good platform
0for technological innovation and invention, it still has its set-backs. This is because it opens up
new ways in which designed protective mechanisms can be twisted and manipulated in the name
of technology and make loop holes in measures set to protect banks against fraud. Thus, this
paper will help in shedding light on understanding the causes, risks and strategies in protecting
banks against evolved conniving fraud tricks and strategies.
With the above said, it will also create awareness among foreign investors in Bangladesh in
making them aware of the possible fraud tricks happening in the midst of financial transactions.
Consequently, it will enlighten them in not being falling victims of bank frauds happening not
only in the country but as well as on a global platform. As a result, this will protect them in not
losing their financial investments in the form of assets and money in Bangladesh and elsewhere
around the globe.
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6.3 Limitation of the Study

The major envisioned limitation to this research paper is the aspect of insufficient time. The time
barrier comes in as a result of there is limited time in documenting the research paper and also
distributing the questionnaire and collecting them for recording purposes. The pronounced time
to conduct the entire research paper is not sufficient enough to run it seamlessly. Thus, with this
time being a barring factor, most of the itineraries of the research paper need to be over rushed to
remain valid in submitting the research paper. The banks other than the five investigated banks
are beyond the research interest.
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APPENDIX
SURVEY QUESTIONNAIRE
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PROJECT TITLE
An Empirical Study on the Preventive Mechanisms of Credit Card

Frauds in the Banking Industry of Dhaka, Bangladesh
Dear respondent,
The handout you have received is a questionnaire that has been designed as requirement to
partial fulfilment of my Final Year Project (FYP) for the degree of Bachelor in BA (Hons)
Accounting & Finance at Asia Pacific University of Technology and Innovation (APU) located
in Kuala Lumpur, Malaysia. The aim of this questionnaire is to collect first hand data for
research purpose solely.
Please note that your participation is voluntary. Hence, you may withdraw from the research at
any time and for any reason and even have the option to omit questions that you do not want to
answer. However, you are requested to respond to all the questions in the questionnaire.
I assure you that you neither need to reveal your name nor your private information will be
published; rather all information provided will be kept as private and confidential.
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Please do not hesitate to inform the researcher via ovidotkhan@gmail.com or +601124204850,

should you have further inquiries. Thank you for your time, effort and participation in this
research in advance.
Kind regards,
MD SHAFIQUL ISLAM
TP044670
APU, Kuala Lumpur, Malaysia,
Section A: Personal Details – Demographics

(Please tick √ wherever necessary)
1. Your gender: ☐ Male ☐ Female

2. Your age: ☐ Below 20 years ☐ 20 – 24 years ☐ 25 – 30 years
☐ Above 30 years
3. Your marital status: ☐ Married ☐ Unmarried ☐ Divorced
4. Your educational level: ☐ Diploma ☐ Degree ☐ Master ☐ PhD
☐ Others (please specify): …………………
5. Your position: ☐ Top Management ☐ Senior Officer ☐ Junior Officer
☐ Management Trainee ☐ Others (please specify): ….……………
6. Income Level: ☐ 10-30 Thousand ☐ 31-50 Thousand ☐ 51-80 Thousand
☐ Above 81 Thousand
7. Your years of experience: ☐ < 2 year ☐ 3-5 years
☐ 5-10 years ☐ > 10 years
Section B: Internal Control Systems at Your Bank

(Please circle the answer of your choice)
Strongly Agree Neutral Disagree Strongly

Opinion
Agree Disagree
01. The management of the bank is adequately aware 1 2 3 4 5

about credit card frauds.
Page 61 of 64
02. The management’s attitude is positive towards 1 2 3 4 5

prevention of credit card frauds.
03. The ethical values and behaviours of the

management and the staffs at my bank limit 1 2 3 4 5
credit card frauds.
04. The management has so far taken adequate 1 2 3 4 5
actions to prevent credit card frauds.
05. The internal controls are regularly reviewed by 1 2 3 4 5
the management for improvement.
06. Management over-ride of internal control limits
successful implementation of credit card fraud 1 2 3 4 5
prevention system in my bank.
Section C: Audit Procedure at Your Bank

Opinion
Agree Disagree
01. The bank has a regular and internal audit 1 2 3 4 5

procedure for monitoring credit card frauds.
02. The auditors have enough knowledge to detect 1 2 3 4 5
different techniques used in credit card frauds.
03. The auditors evaluate the indicators of credit 1 2 3 4 5
card fraud.
04. The auditors recommend further actions and 1 2 3 4 5
strategies to the management.
05. The auditors are able to address the credit card 1 2 3 4 5

frauds faced by the customers.
06. Internal auditors are provided with orientation 1 2 3 4 5
course on digital forensic accounting.
Section D: Risk Management Strategies at Your Bank


Opinion
Agree Disagree
01. The bank is able to identify the risks related to 1 2 3 4 5
credit card frauds.
Page 62 of 64
02. The bank is able to effectively evaluate the 1 2 3 4 5

risks related to credit card frauds.
03. The bank educates the customers to keep the 1 2 3 4 5
customers safe.
04. The bank employs modern technologies in the 1 2 3 4 5
design of credit cards.
05. The bank employs multiple identification

features (face, finger prints, etc.) to counter 1 2 3 4 5
counterfeit card use.
06. The bank updates its security features in credit 1 2 3 4 5
cards regularly.
Section E: Your Generic Opinion on Credit Card Fraud Prevention System at Your Bank

Opinion
Agree Disagree
01.
The bank often experiences credit card frauds. 1 2 3 4 5
02. Credit card fraud is one of the major frauds 1 2 3 4 5

experienced by the bank.
03. Credit card frauds cause significant monetary 1 2 3 4 5
losses to the bank.
04. There are lack of tools in the bank to 1 2 3 4 5
effectively detect credit card frauds.
05. The fraud prevention system at the bank 1 2 3 4 5

addresses credit card frauds adequately.
06. Technologies used in the credit cards need

more improvement to prevent fraud in the 1 2 3 4 5
bank.
~ The questionnaire ends here. ~

Page 63 of 64
~ Thank you for your cooperation. ~
Page 64 of 64

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An Empirical Study on the Preventive Mechanisms of Credit Card Frauds in the Banking Industry of Dhaka, Bangladesh

3.11.4 Bivariate Pearson Correlation Analysis .................................................................................. 23

6.3 Contributions of the Study ........................................................................................................... 53

2.0 Research Background

Figure 1: Flow chat for credit card fraud detection

3.0 Problem Statement

4.0 Research Objectives

5.0 Research Questions

6.0 Scope of the Study

6.0 Definition of Terms

Terms Contextual Definition Operational Definition

Fraud Akinyomi, (2012) defines fraud as The act of conning people by

Fraud authorisation with the purpose of money.

Table 1: Definition of Terms

2.1 Internal Control Systems

2.2 Audit Procedure

2.3 Risk Management Strategies

2.4 Research Theory: Fraud Triangle

Figure 1: The Fraud Triangle

3.1 Research Conceptual Framework

Credit Card Fraud Audit procedure

Dependent variable Independent Variables

Figure 2: Research Framework (Designed for this research paper)

Above is a diagrammatical representation of the research framework in which the dependent

3.2 Research Hypotheses

3.3 Research Design

3.4 Research Philosophy

3.5 Research Classification and Approaches

3.6 Research Strategy

3.7 Research Choices

3.8 Data Collection

3.11 Research Analysis

3.11.1 Frequency Descriptive Statistics Analysis

3.11.2 Reliability Analysis of the Questionnaire

Figure 3: Rating Scale of Reliability Analysis

Source: Mohamad et al. (2015)

3.11.3 Normality Analysis

𝑆𝑡𝑎𝑡𝑖𝑠𝑡𝑖𝑐𝑎𝑙 𝑣𝑎𝑙𝑢𝑒 𝑜𝑓 𝑠𝑘𝑒𝑤𝑛𝑒𝑠𝑠−0 𝑆𝑡𝑎𝑡𝑖𝑠𝑡𝑖𝑐𝑎𝑙 𝑣𝑎𝑙𝑢𝑒 𝑜𝑓 𝐾𝑢𝑟𝑡𝑜𝑠𝑖𝑠−0

3.11.4 Bivariate Pearson Correlation Analysis

3.11.5 Multiple Linear Regression Analysis

3.12 Ethical Considerations

4.1 Demographic Profile (Descriptive Analysis of Personal Data):

Figure1: Gender of the Responds

Table 1: Gender of the Respondents

Frequency Percent Valid Percent Cumulative Percent

Male 37 54.4 54.4 100.0

21% 20-24 years

34% Below 20 years

Figure 2: Age of the Responds

Table 2: Age of the Respondents

Frequency Percent Valid Percent Cumulative Percent

4.1.3 MARITAL STATUS

Figure 3: Marital Status of the Responds

Table 3: Marital Status of the Respondents

Frequenc Valid Cumulative

4.1.3 EDUCATION LEVEL

Figure 4: Education Level of the Respondents

Table 4: Education Level of the Respondents

Frequenc Valid Cumulative

Total 68 100.0 100.0

Figure 5: Designation of the Respondents

Table 5: Designation of the Respondents

Frequen Percen Valid Cumulative