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Empirical Analysis: Internal Control & Fraud Prevention in Nigerian Banking, Assignments of Research Methodology

University of South Wales(USW)Research Methodology

A research paper that examines the issues of internal control and fraud prevention in the Nigerian banking industry. The study uses both primary and secondary data to test the effectiveness of internal control against fraud and the determinants of fraud prevention. The results show that internal control is effective against fraud but not all staff are committed to it, while technology, staff qualifications, and education play significant roles in fraud prevention. The paper recommends the continuation of the cashless policy and improvement in staff engagement to reduce fraud in the banking system.

What you will learn

  • What recommendations does the study make to reduce fraud in the Nigerian banking sector?
  • What are the determinants of fraud prevention identified in the study?

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2020/2021

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International Journal of Economics and Financial
Issues
ISSN: 2146-4138
available at http: www.econjournals.com
International Journal of Economics and Financial Issues, 2016, 6(3), 1172-1179.
International Journal of Economics and Financial Issues | Vol 6 • Issue 3 • 2016
1172
Fraud Prevention and Internal Control in the Nigerian Banking
System
Kehinde Adekunle Adetiloye1*, Felicia Omowunmi Olokoyo2, Joseph Niyan Taiwo3
1Department of Banking and Finance, Covenant University, Ota, Nigeria, 2Department of Banking and Finance, Covenant University, Ota,
Nigeria, 3Department of Banking and Finance, Covenant University, Ota, Nigeria. *Email: kehinde.adetiloye@coveanntuniversity.edu.ng
ABSTRACT
This paper examines the issues of internal control viz., fraud prevention in the banking industry, adopting both primary and secondary data. Primary data
was used to test internal control while secondary data were employed to test fraud prevention. The main primary variables were separation of duties,
monitoring, and staff qualifications while the main secondary variables are bank profit, regulation, technology and M2. In both cases regression techniques
were adopted. The results show that internal control on its own is effective against fraud, but not all staff are committed to it, while the secondary data
is quite supportive of the primary data but more exemplifying in that M2, staff qualifications and technology were significant throughout the various
dependent variables. It is also clear from the regressions that technological based fraud is significant. The paper recommends the continuation of the
cashless policy of the Central Bank to reduce available cash and improvement in educated staff engagement to reduce fraud in the banking system.
Keywords: Deposit Money Banks, Internal Control, Fraud Prevention, Regulation, Cashless Policy
JEL Classifications: G21, G38
1. INTRODUCTION
Fraud control is becoming an issue that the regulators and top
banking executives who are in saddle when fraudulent activities
takes place or more succinctly when someone commit an act
of fraud in the financial institutions under their management. It
is quite clear that the installation of internal controls cannot be
sufficient to eliminate dishonest activities, constantly rejigging of
the controls already put in place to ensure that they are effective
in reducing fraudulent activities in financial institutions from
becoming successful should become important. Fraudulent
activities are rampant in every organization but more rampant
in financial institutions and perhaps more common in Deposit
Money Banks (DMBs) because of the instruments of their trade.
Banks are most prone to financial fraud as a result of money and
near money instruments used in the process of their operations.
The acts of financial fraud has persisted in DMBs in spite of
strong internal controls put in place to forestall and control any
planned intention to steal the bank’s money. Strong controls that
at times are antithetical to the efficient operations of the bank
having been put in place in certain cases but have not succeeded
in reducing drastically the amount of funds lost. Thus all internal
control measures have become preventive and protective of
the banks financial resources sometimes to the detriment of
the bank’s primary operations. Most banks are litigation-shy as
judicial officers often do not find it interesting that that the process
(internal controls) put in place by the bank was compromised by
the employee. In addition, where the bank is litigious, courts often
sympathize with customers whose infractions led to large losses
of funds irrespective of whether collusion with an employee had
existed The scenarios are not funny outside the banking halls when
financial fraud happened and parties have to prove their innocence.
Whatever the case is, the bank losses money and reputation, the
staff members’ lose jobs.
One of the reasons for the use and continuous revision of internal
control systems in the bank is to ensure that losses occasioned by
fraudulent activities are minimal if they occur, and attempts are
discovered very early before losses can occur. The triumvirate
of fraud prevention, fraud control and detection are coalesced
into the effective internal control system that the bank employs.
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Download Empirical Analysis: Internal Control & Fraud Prevention in Nigerian Banking and more Assignments Research Methodology in PDF only on Docsity!

International Journal of Economics and Financial

Issues

ISSN: 2146-

available at http: www.econjournals.com

International Journal of Economics and Financial Issues, 2016, 6(3), 1172-1179.

Fraud Prevention and Internal Control in the Nigerian Banking

System

Kehinde Adekunle Adetiloye^1 *, Felicia Omowunmi Olokoyo^2 , Joseph Niyan Taiwo^3

1 Department of Banking and Finance, Covenant University, Ota, Nigeria, 2 Department of Banking and Finance, Covenant University, Ota,

Nigeria, 3 Department of Banking and Finance, Covenant University, Ota, Nigeria. *Email: kehinde.adetiloye@coveanntuniversity.edu.ng

ABSTRACT

This paper examines the issues of internal control viz., fraud prevention in the banking industry, adopting both primary and secondary data. Primary data was used to test internal control while secondary data were employed to test fraud prevention. The main primary variables were separation of duties, monitoring, and staff qualifications while the main secondary variables are bank profit, regulation, technology and M2. In both cases regression techniques were adopted. The results show that internal control on its own is effective against fraud, but not all staff are committed to it, while the secondary data is quite supportive of the primary data but more exemplifying in that M2 , staff qualifications and technology were significant throughout the various dependent variables. It is also clear from the regressions that technological based fraud is significant. The paper recommends the continuation of the cashless policy of the Central Bank to reduce available cash and improvement in educated staff engagement to reduce fraud in the banking system. Keywords: Deposit Money Banks, Internal Control, Fraud Prevention, Regulation, Cashless Policy JEL Classifications: G21, G

1. INTRODUCTION

Fraud control is becoming an issue that the regulators and top

banking executives who are in saddle when fraudulent activities

takes place or more succinctly when someone commit an act

of fraud in the financial institutions under their management. It

is quite clear that the installation of internal controls cannot be

sufficient to eliminate dishonest activities, constantly rejigging of

the controls already put in place to ensure that they are effective

in reducing fraudulent activities in financial institutions from

becoming successful should become important. Fraudulent

activities are rampant in every organization but more rampant

in financial institutions and perhaps more common in Deposit

Money Banks (DMBs) because of the instruments of their trade.

Banks are most prone to financial fraud as a result of money and

near money instruments used in the process of their operations.

The acts of financial fraud has persisted in DMBs in spite of

strong internal controls put in place to forestall and control any

planned intention to steal the bank’s money. Strong controls that

at times are antithetical to the efficient operations of the bank

having been put in place in certain cases but have not succeeded

in reducing drastically the amount of funds lost. Thus all internal

control measures have become preventive and protective of

the banks financial resources sometimes to the detriment of

the bank’s primary operations. Most banks are litigation-shy as

judicial officers often do not find it interesting that that the process

(internal controls) put in place by the bank was compromised by

the employee. In addition, where the bank is litigious, courts often

sympathize with customers whose infractions led to large losses

of funds irrespective of whether collusion with an employee had

existed The scenarios are not funny outside the banking halls when

financial fraud happened and parties have to prove their innocence.

Whatever the case is, the bank losses money and reputation, the

staff members’ lose jobs.

One of the reasons for the use and continuous revision of internal

control systems in the bank is to ensure that losses occasioned by

fraudulent activities are minimal if they occur, and attempts are

discovered very early before losses can occur. The triumvirate

of fraud prevention, fraud control and detection are coalesced

into the effective internal control system that the bank employs.

Most studies done earlier dealing with the fraud had employed

primary data and did not consider the use of secondary data, while

employees were the main focus of those studies. A new approach

is required to measure the determinants of possibility to commit

fraud and what can be adopted as main levers in the control of

fraud within the banking system. Black (2005) describes fraudulent

employees as super financial predators which seek to ruin many

of such establishments. Ozigbo and Orife (2011) conclude in

their study that internal control is an effective deterrent to internal

organizational fraud that may be planned in the organization.

The objective of this study is to test the determinants of

fraud prevention and internal control system impact on banks

performance and the determinants that can be effective in the

management and control of financial fraud against DMBs. The

objective to be achieved is thus broken into two specific objectives

viz .: To determine the internal control measures that are effective

and other determinants that are significant in the prevention and

control of fraud in DMBs. The paper consequently proceeds as

follows: Following after this introduction is the literature review.

Section three is on methodology and the measurements adopting

both primary and secondary data and techniques in ascertaining

such determinants, the results are fully discussed in sections four

while the last section recommends and concludes on the paper.

2. CONCEPTUAL FRAMEWORK AND LITERATURE REVIEW

Economic theory on fraud dates back to when white collar frauds

by Chief Executive Officers (CEOs) against the organization were

becoming rampant. This theory started with Akerlof (1970)’s study

with the belief that this is an inefficient contract that is manifested

in the market for lemons. One of the notorious white collar crimes

is the employee fraud in the organization with intent to enrich and

at most and exits the organization as quickly as possible when the

fraud has been successfully executed. Committee of Sponsoring

Organization of the Treadway Commission (2010) reports large

sums of money being lost regularly by public firms and more

commonly among the medium or lower size firms, where more

than 26% of assets were lost. The make-up of the management

seems not significantly different from non-fraud prone firms. Black

(2005) had earlier termed the phenomenon as control fraud. There

are different variants of control frauds: Accounting fraud, looting

and crass kleptomania. This theory, traced from the efficient

market hypothesis proves that the awareness by the executives

of deposit insurance and other palliatives that provide succour to

creditors incentivise the looting spree by the CEOs. The special

case of the Savings and Loans in the United States of the 1990s

is likened to two other scenarios during which noticeable losses

to the financial system of Chile and United States occurred which

were subsequently transferred to the deposit insurers. Wood (2003)

held to the belief that the deposit insurance provided impetus for

looting in over 3000 savings and loans firms in those years.

Chakrabarty (2013) defines fraud as any behavior by which one

person intends to obtain a dishonest advantage over another where

the person makes an illicit gain while the other party incurs a

loss. The Institute of Professional Practises Framework (Sommer,

2014) defines fraud as ‘any illegal act characterized by deceit or

concealment or violation of trust which do not directly depend on

the use of violence, perpetrated in firms to obtain money, property,

or services; to avoid payment or loss of services; or to secure

personal or business advantage. While Chakrabarty categorizes the

frauds into three different types as technology related, know your

customer (KYC) related and advances related. ACL groups fraud

in banking into eleven sections with four being quite significant

among which are corruption, cash in hand, billing and cheque

tampering, non-cash skimming and larceny among several others.

In these days of technology enabled payment platforms, it is

reported that the greatest value of frauds occur from this channel.

KYC is related to customers planned fraud in any form either

through duplication of data or through falsification or obtainment

of data to commit fraud, while the third is related to advances

portfolio which may cut across several banks.

Khanna and Arora (2009) from the Indian environment believes the

reason for the rise in fraud profile in the banking industry is because

the procedures jointly instituted by the banks and the Reserve

Bank were not fully implemented. The paper cites overburdened

staff, lack of training and competition as other causes of the fraud.

The accounting firms of Ernst and Young (2010) and Deloitte

(2015) have attempted to help stem fraud in several ways. Fraud

detection or prevention is a function that should be system-wide,

but mostly in the realm of internal audit group. Fraud should not

go through and be undetected in any accounting year where an

effective internal control and audit process are in place.

Internal control is a gamut of measures that seeks to detect errors,

frauds and irregularities, to ensure that all transactions are correctly

processed and ensure that all assets are safeguarded through

restriction of access to authorized persons only. It also enables

work to be performed by a person and any omission or error can

be traced to that person and to make the work of the auditors easier

(Aguotu, 2002). One of the ways to detect fraud, though, ex-post

is through internal audit. Internal audit is the process engaged to

check if due process and procedures have been followed in the

carrying out the operations of an organization which is carried

out regularly and as when needed. According to Gayasi (2000)

internal audit functions to provide independent view of financial,

accounting and other processes to the management as a basis

for protective and constructive service. It performs well if it has

sufficient standing and authority within the bank and at the same

time operates according sound principles (Bank for International

Settlement, 2012). It acts a check on the way in which the

operations of the firm or the organization are done.

For a country known negatively with corruption perception index,

the Nigerian financial environment presents a fraud level in

significant figures and increasing in sophistication. The fraudulent

practices in the Nigerian banking industry show consistently that

outright theft is the commonest with the highest percentage in

terms of value and volume (Owolabi, 2010). The paper analyzed

in details employee involvement scenarios. The typology of fraud

in Nigeria is variously described and detailed out. Owho (2005)

and Nwanze (2006) gave different typologies as many as nine

respondents (71%) are the in the 30-40 years bracket while 15%

are in 40-50 years age bracket. 77.5% are bachelor degrees holders.

Only 14.6% are HND holders showing the degree of discrimination

against the holders of the diploma. There are more chartered

accountants (67%) among the respondents than bankers (6%).

A sizeable number (27%) of them do not have any professional

qualification and majority at 80% have working with experience

of between 5 and 15 years. The complete status of the respondents

is reported in Table 2.

Reliability of an instrument shows how stable and consistent the

instrument is within the given context. It is the degree which an

assessment tool produces a stable and consistent result. The reliability

of a research instrument can be assessed for consistency using the

Cronbach’s alpha test. In this test, the coefficient ranges from 0 to

1.00. In determining the reliability of the research instrument, the

Cronbach’s alpha test was administered to measure the reliability

of the underlying dimensions of the research instrument.

4. RESULTS AND DISCUSSIONS 4.1. Primary Data Results

The data output indicate that data was well spread with Cronbach’s

alpha of 0.778 when the minimum expected is 0.75. This shows

that the output is unique in results to be expected. The items in the

questionnaire are 21 with summary of output as shown in Table 3.

The use of primary data based fully on responses from bank staffs

show that most were in favor of internal control being very effective

for fraud control. The responses are further analyzed to understand

the distribution around each question. From Table 3 it can be observed

that there are five significant responses. These five observations are

significant at various levels from the respondents’ standpoint and

at various levels. The most significant of them all is remuneration.

Next to this is qualification of bank staff, both beyond 0.05 level

of significance. The rest are significant equally beyond 0.1 levels.

The primary data tested the effectiveness internal controls in the

banking system to the effect that it is effective and has been and

can result in better performance of banks. A number of variables

were used in the test from the 21 items in the questionnaire.

An observation about the possible skewness of the responses

Table 2: Demographic and status information of

respondents

Status Measuring group Frequency (%) Gender Male 55 (62) Female 34 (38) Age bracket (years) <30 10 (11) 30<40 63 (71) 40<50 13 (15)

50 3 (3) Academic qualification OND 3 (3.4) HND 13 (14.6) B.Sc. 69 (77.5) Post-graduate 4 (4.5) Professional qualifications ACA 41 (46) ACCA 19 (21) ACIB 5 (5.6) None 24 (27) Experience (years) 1<5 9 (10.1)

5<15 71 (80) 15<25 8 (9)

25 1 (1.1) Source: Field study on Fraud (2015)

Table 3: Statistical analysis of divergence in respondents views

Headword Statistic Bias Standard error Lower Upper T Significant (two‑tailed) Weakness 18.4526 −2.29 3.9091 6.38748 21.637 2.424 0. Effectiveness 25.3179 −3.78 7.1555 0.89442 30.318 1.766 0. Efficiency 23.0542 −3.59 6.9500 2.88097 28.987 1.94 0. Duties 27.4317 −4.38 8.5370 1.64316 34.14 1.63 0. Fraud 25.1694 −3.44 6.6800 2.04939 29.953 1.777 0. Responsibility 28.4605 −5.21 10.488 2.44949 36.523 1.571 0. Review 34.0661 −6.93 14.013 0.44721 43.270 1.313 0. Awareness 21.1660 −2.80 4.9399 2.94957 22.456 2.113 0. Remuneration 12.8646 −1.88 3.8016 1.78885 18.005 3.476 0. Objectives 24.7285 −3.31 5.9665 2.07364 25.928 1.808 0. Fraud 29.3683 −4.66 9.0508 0 35.601 1.523 0. Capital 24.99 −3.56 6.5533 2.05240 29.580 1.79 0. Monitoring 25.3179 −3.43 6.4020 0.89442 27.933 1.766 0. Audit 22.4165 −3.34 6.9179 3.93700 28.621 1.995 0. Regulatory 20.8446 −2.71 4.8568 2.86787 23.543 2.145 0. Profitability 29.6900 −5.05 10.035 0.4472 37.064 1.506 0. Adequacy 24.6779 −3.36 6.1377 1.34164 25.195 1.812 0. Qualification 16.0156 −2.55 5.3761 1.2247 22.113 2.792 0. Technology 16.2941 −2.19 4.1899 5.47722 20.731 2.745 0. Performance 25.5734 −3.51 6.5138 0.44721 26.290 1.749 0. Source: Variables from the responses of respondents (significant issues in bold) Figure 1: The relationship between the loss variables Source: Loss variables adopted from Various NDIC Reports (2015)

prompted a test to show the significant divergence of responses

as represented by bias of higher than −2.26 and with t = 2.

of and ρ of 0.098 (about 0.1). The study analyzed the variables

further and employed secondary data to prove the validity or

otherwise of the observation of the respondents. Five items were

observed to have this type of result: Weakness, remuneration,

regulatory, technology and qualification. Table 4 shows the

complete comparative respondents’ result. The analysis was to

help to discover the divergent views of the respondents. The highly

divergent views are those with high significant values.

The regression of primary data indicates that internal control can

effectively reduce fraud in the banking system. Constant changes in

the process and staff can effectively reduce fraud as the t-statistics

shows, separation of duties seem to be most important positive factors

that reduce fraud effectively. Monitoring and process control are

other highly significant variables in the primary regression equations.

Regression summary of respondents’ are displayed in Table 4.

These show clearly that the observed variables should be important

for attention before the bank management and the monetary

authorities as the variables to be manipulated in order to obtain the

best scenario of the management of fraud in banking organizations.

However, an interesting result of the regression is that most staff

members do not believe it is a joint responsibility to monitor and

reduce fraud in the banking system. This is not surprising as the

same staff have often compromised the internal process to commit

fraud while some are actually employed in the bank with the intent

to commit fraud against the system.

Table 4 show how much of the variance of the dependent variable

can be explained by the model. The adjusted R^2 is 0.698 when

expressed in percentage; the model explains that 69.8% variance

of fraud in DMBs is in respect to the effect that internal control

system has on fraud prevention. The other 31.2% unexplained

variable is due to the variations in other variables outside this

model. There is a strong inverse relationship between internal

control and fraud.

Table 5 shows the extent to which internal control system has a

significant effect on fraud prevention in DMBs. Beta values are

used for the comparison. In Table 5, the largest beta co-efficient

is 0.421, which shows that separation of duties is an effective

measure of controlling fraud. It makes the strongest contribution

to explaining the dependent variable; which means that for

every 16.8% case of fraud, weakness in the internal control is

responsible.

4.2. Secondary Data Results

The study was able to accumulate data for only 14 years on the

all the variables that were adopted for the regression equation set

out in section 3. The descriptive of the data are as analyzed below.

From the data in Table 6 the standard deviation of the Actloss is

highest among the dependent variables while the independent

variables show Bprofit as highest. The skewness of Actloss and

Regul were highest and lowest respectively.

Table 6: Descriptives of the variables

Variables Actloss Bprofit Qualification etrans Renumetn M2 Regulatory Wloss Mean 17.0125 24194.54 0.6765 16.4285 1270.714 23.8287 −1.631977 11. Median 12.5585 17278.25 0.6788 11.5000 1065.000 18.0807 −1.408451 10. Maxim 56.0479 62087.50 0.7180 48.0000 2970.000 56.1844 39.83740 26. Minim 6.8146 −2510.000 0.6430 0.0000 310.0000 9.1030 −71.42857 2. Standard deviated 13.3982 21457.20 0.0214 15.673 886.9955 14.014 24.04698 7. Skewss 1.9775 0.7717 0.1100 0.6322 0.7684 0.9707 −1.477130 0. Kurtosis 6.2288 2.2647 2.3603 2.1422 2.2903 3.0603 6.668244 2. J Bera 15.2064 1.7050 0.2669 1.3620 1.6717 2.2007 12.94047 1. P 0.0004 0.4263 0.8750 0.5061 0.4334 0.3327 0.001549 0. Sum 238.175 338,723.5 9.4711 230.00 17,790.00 333.6027 −22.84768 160. SS deviation 2333.654 5.99E+09 0.0059 3193.429 10,2278 2553.100 7517.341 657. Observation 14 14 14 14 14 14 14 14 Source: Outputs of the variables, SS: Sum of squares

Table 4: Regression summary outputs

Model R R^2 Adjusted R^2 SE estimate F stat Sig. 1 0.836a^ 0.698 0.680 0.22100 38.449 0.000a Model 1 predictors: (Constant), Constant changes effective internal control separation of duties monitoring staff qualification. aP=0.05. SE: Standard error

Table 5: Coefficient results

Model Unstandardized coefficients Standardized coefficients t Significant Β SE Beta Β SE 1 (Constant) 0.468 0.313 1.494 0. Constant changes 0.421 0.078 0.384 5.400 0.000*** Effective internal control 0.092 0.039 0.154 2.344 0.021** Separation of duties 0.168 0.037 0.297 4.567 0.000*** Monitoring 0.140 0.042 0.238 3.331 0.001*** Staff qualification 0.066 0.027 0.176 2.419 0.018** Source: Regression outputs of respondents responses, ,*P=0.

Actloss while the increase in loss is least significant. Of all the

variables the most significant is cash and the most insignificant

is regulation. The independent variables behaved as a priori

but displayed unanticipated magnitude in their impacts on the

dependent variables. Clearly autoregressive first order is very

impactful on the results of the Actloss and weighted loss of fund

to the banking system.

The most positively significant and impactful variable is cash as

used in the baking system, while the most negatively significantly

is technology use in the system. Since the two are two are

negatively correlated almost, the engagement of one must be

used to deal with the other. It is safer to encourage the use of

technology to reduce cash in the system while efforts are made

to increase the quality of staff with good pay. These two efforts

would reduce fraud in the very long term in the banking system

in the country.

While internal control is a bank specific challenge, the variable

adopted here can both be managed at the bank-firm level and at

the macroeconomic level. Banks can adopt a self-regulation mode

that makes them a model, though the monetary authorities and

regulator of the banking system should do more work to improve

the services and reduce fraud. From the regression outputs higher

level of income would reduce fraud so banks should rather pay

attention to remunerations for employees, a worrisome par to

labor managements in banks is the continuous and increasing

adoption of the casualization and employment of contract staff

which costs about a quarter of regular staff. This is not only

degrading the profession but leading to a higher level of fraud.

Coupled with this is the level of education of the workers. Bank

should rather employ qualified staff and pay good income for

using their services. A safe conclusion would be then the hiring

of educated and more qualified people in the system would

definitely reduce fraud.

The use of technology to commit fraud can be controlled by the

regulators with the biometric registration that is commonplace

in the country. Since technological fraud is increasing, the use

of cash in rendering service needs to be reduced by the Central

Bank of Nigeria by intensifying the cashless policy begun some

years back. This policy as matter of fact should be taken to a

higher level with the financial system. The anti-cybercrime

functions of the regulators and law enforcement agencies

need be amplified. The assurance that internet fraud would

reduce would ensure that more customers would move to the

platform to enjoy services. Unlike at present where many are

sceptical about using the e-platforms to obtain services form

the banks.

REFERENCES Abdul Rasheed, A., Babaita, I.S., Yinusa, M.A. (2012), Fraud and its implications for bank performance in Nigeria. International Journal of Asian Social Science, 2(4), 382-387. Aguotu, J. (2002), Fundamentals of Auditing. Meridian: Association Publishers Limited. Ajayi, W.A. (2003), Fraud in Nigeria’s financial system: Evidence from commercial banks. Ilorin Journal of Business and Social sciences, 8(1), 111-117. Ajayi, W.A. (Undated), Determinants of Fraud in the Nigerian Banking Industry. Available from: http://www.unilorin.edu.ng/publications/ ajayima/8.pdf on 17/10/2015. Akerlof, G.A. (1970), The market for lemons quality, uncertainty, and the market mechanism. Quarterly Journal of Economics, 84(3), 488-500. Bank for International Settlement. (2012), The internal audit function in banks. Basel Committee on Banking Supervision. Available from: http://www.bis.org/publ/bcbs223.pdf. Black, W.K. (2005), When Fragile becomes Friable: Endemic Control Fraud as a Cause of Economic Stagnation and Collapse Being a Paper Presented in an IDEAS Workshop: Delhi, India Financial Crime and Fragility Under Financial Globalization, December 19-20.

Table 8: Regression equations outputs

Variables Wloss Wloss Actloss Actloss Incrloss Incrloss Constant 298.1691 747.2342 707.7916 896.1152 −409.6225 −150. (1.4341) (4.0048) (1.8724) (2.2446) (−1.1299) (−0.3356) Bprofit −7.92E- 05 2.54E- 05 −0.0002 7.71E- 05 0.0001 9.85E- 06 (−0.6575) (0.1745) (−1.2181) (0.1940) (0.8930) (0.0276) Qualification −428.28 −1136.044 −1073.922 −1385.185 645.6405 248. (−1.3457) (−3.940)*** (−1.8559)* (4.8816)*** (1.1634) (0.3596) etrans 1.7191 2.3887 2.4701 3.0291 −0.7510 −0. (3.4068)*** (8.3659)*** (2.6923)** (4.881)*** (−0.853) (−0.868) Remuneration −0.0227 −0.0153 −0.0159 −0.0141 −0.0068 −0. (−2.4684)** (−2.5892)** (−0.950) (−1.1189) (−0.4242) (−0.0792) M2 0.2322 0.5232 0.9058 0.9998 −0.6735 −0. (1.7874) (5.1903)*** (3.833)*** (4.7399)*** (−2.97)*** (−2.023)** Regulatory −0.0704 −0.3554 −0.1696 −0.5218 0.0992 0. (−0.8263) (−2.3492)** (−1.0951) (−1.3719) (0.6680) (0.3227) Ar (1) - −0.7351 - −0.7998 - −0.

  • (−4.216)*** - (−2.4193)** - (−1.6076) R^2 0.7002 0.8885 0.7206 0.8555 0.5958 0. Adjusted R^2 0.4433 0.7324 0.4811 0.6534 0.2493 0. F-statistics 2.7253 5.6939 3.0095 4.2320 1.7198 2. DW 2.0197 2.2768 2.0719 2.3502 2.1859 2. Observation 14 14 14 14 14 14 Source: Output of data from variables: Coefficients and t-statistics. ,,Represent significance at 0.01, 0.05 and 0.1 respectively

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