Budget and Budgetary Control System and its Impact on Organizational Performance: Case of Private Banking Industry in Ethiopia

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The purpose of this study is mainly to empirically examine the practice of budgeting and budgetary control system and its impacts in private banking industry in Ethiopia. Beside this, it also tries to identify problems associated with budgeting and budgetary controls and offer alternative solutions. The descriptive research design was used. The data that was used for the study is a primary data collected using structured questionnaire from 128 respondents randomly selected from all private banks.Purposive or judgmental sampling was applied to select target working units while simple random sampling was used to select respondents from these units. The descriptive statistics was used and STATA 14 plus Excel Spreadsheet were appliedfor conducting the data analysis. The study revealed that private commercial banks have a budgeting and budgetary control system in place. It was found out that a budget and budgetary control affects the financial and non-financial performance of the banks. That is, the study shows that the presence of an effective budget and budgetary control system can improve the overall organizational performance of the banks. However, according to the result of this study, their budget and budgetary control system is not effective as they failed to comply with the major essentials of an effective budgeting and budgetary control systems. Moreover, the study result shows that there are problems that should be addressed by the senior managers so as to improve their budget and budgetary control systems. The study recommended that banks should advance their budget and budgetary control system to be fully benefited from the system to improve their overall performance. The banks should ensure full participation of all concerned staffs in their budgeting system and also delivercapacity development and awareness creation trainings on the concepts and techniques of budget and budgetary control systems. Moreover, there should also be application of an appropriate information technology tool in the banks budgeting system.



Budgetary control, Performance, Private Banks