Effect of Budgetary Control on Financial Performance of Selected Commercial Banks in Kenya
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Date
2019-07
Authors
Mbuthia, Veronicah Wanjugu
Omagwa, Job
Journal Title
Journal ISSN
Volume Title
Publisher
International Organization Of Scientific Research (IOSR
Abstract
The successful provision of basic banking products and services must not be devoid of an effective
budget control system, if the organizational goals and objectives are to be achieved. A detailed review of past
studies shows that they were carried out either on a different context or interrogated different conceptual issues.
In addition, some of the past empirical studies focused on different research methodologies and adopted
different data collection instruments. The purpose of this study was to establish the effect of budgetary control
on financial performance of selected commercial banks in Kenya. The study specifically sought to establish the
effect of budget planning, budget implementation, budget control and budget review on financial performance of
selected commercial banks in Kenya. The study adopted a cross sectional descriptive design and the target
population was the employees in credit, accounting/finance and operations departments in three selected
commercial banks. Both secondary and primary data was used and analyzed using trend analysis, multiple
regression analysis and descriptive analysis. The study results indicated that budgetary planning has a positive
and significant effect on financial performance (P = 0.000). In addition, the study found that budget
implementation was found to have positive and significant effect on financial performance (P= 0.000). Further,
budget control had a positive and significant effect on financial performance (P = 0.021). Also, the study found
that budget review was also found to have positive and significant effect on financial performance (P= 0.001).
The study found that budget planning had the most significant effect on financial performance of selected
commercial banks in Kenya followed by budget implementation, budget review and budget control. The study
recommends that the managers of the banks should review their current performance yearly targets, work on
threats and opportunities and analyses the success and failure of previous plans so as to improve on their
budgetary planning. Further, the managers in commercial banks should establish more budgeting centers,
employ more budget officers and provide budget manual in order to improve on their budgetary control. In
addition, they should solicit feedback, review budget conference for accuracy and arrange for catering and
other vendors so as to improve on the budget conference.
Description
Research Article
Keywords
Budget Planning, Budget Implementation, Budget Control, Budget Review, Financial Performance