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The success of monetary policy to a large extent depends onthe health of the banking institutions through which the policies are implementedwhatever problems which stand against the proper functioning of the banking sectorwill invariably have multiplier effects on the other sectors of the economy

The success of monetary policy to a large extent depends onthe health of the banking institutions through which the policies are implementedwhatever problems which stand against the proper functioning of the banking sectorwill invariably have multiplier effects on the other sectors of the economy (JOYCE, 2013).
This has become a point of great attention in the commercial banking sectoras well as every organization in Africa. In Africabanking fraud has become emerging as cases have been on the increase since the expansion of the banking industry today. However in developing countries banks are the only major source of finance for firms hence their soundness has to be ensured. As such it is crucial to investigate the reasons behind banking fraud and to try to find ways of preventing it. Although this phenomenon is not unique to the commercial banking industry or peculiar to Africa alone the high incidence of fraud within thebanking industry has become a problem to which solution must be provided in view of thelarge sums of money involved and its adverse implications on the economy(JOYCE, 2013).
This isone of the reasons why it is essential to quickly identify any factor which mayhamper the smooth functioning of the commercial banks sector and urgently address suchissues. Since fraud has been identified as a major threat to the growth and development of the banking sector not only in Ethiopia but globally.
Therefore, this research focused on examiningfactors and effects of fraud observed in the commercial banking industry today in Ethiopia and ways of its prevention.