Investment on Accounting Information System (IAIS) Effect on Bank Performance: [A Case of Private Commercial Banks In Ethiopia]

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Addis Ababa University


The main aim of this study is to assess the impact of Investment made on Accounting Information System and its effect on Banks performance in the case of private commercial Banks in Ethiopia. In order to fulfill the stated objective an exploratory research design with a quantitative panel data was used. To this end, the researcher relied on consecutive ten years Annual Audited Financial Report of selected seven Private Commercial Banks in Ethiopia using a purposive sampling method for the period 2005 – 2014. The study employed a multivariate regression model using Return on Asset (ROA), Return on Equity (ROE) and Productivity (PROD) as a dependent variable for measuring the financial performance of the selected Banks and three independent explanatory variables used as a component of Accounting Information Systems; Infrastructure, software and Services. The researcher also controlled for the effects of size (measured by log of total assets). Based on a balanced panel constructed ordinary least squares (OLS) and random effects, the study finds that Investment on AIS’s services provided by IT personnel payroll, hiring, training, evaluating and related costs has a significant and positive impact followed by investment on AIS’s software which was consistent with the researcher’s expectation. While Investment on AIS’s infrastructure was found to have a negative but insignificant impact. The remaining variable, SIZE had positive but insignificant effect on their performance. The overall results revealed that Investment on AIS have a significant impact on the financial performance of Private commercial Banks in Ethiopia. Hence, based on the findings of the study the researcher conclude that, performance of infrastructure was not productive as expected and should have to consistent with the quality of AIS’s service and appropriate implementation of AIS’s software. Finally, as was indicated in the scope and limitation section this study was only confined to the Private commercial Banks in Ethiopia. Hence, the study could be further enhanced by including the State owned banks. The study could also developed by including more independent and control variables to the regression model. Moreover, if further studies should supplemented with qualitative data, the findings would be more informative. Key words: Investment on Accounting Information System, Private Bank Performance, Panel, Ethiopia



Investment on accounting Information system, Private bank Performance, Panel, Ethiopia