Budget and Budgetary Control System and its Impact on Organizational Performance: Case of Private Banking Industry in Ethiopia
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Date
2021-03
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A.A.U
Abstract
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.
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Keywords
Budgetary control, Performance, Private Banks