Analysis of accounting information systems on financial Performance of commercial banks in Kenya: a case of first Community bank and Dubai Islamic bank

Abstract

Accounting information system serves as common weapon in managers' hands today as they battle to keep a competitive edge despite the rapid advancement of technology, growing public knowledge, and demanding requirements from clients and business owners. This study examined how accounting information systems affect First Community Bank and Dubai Islamic Bank's financial performance. The study sought to find the connection between AIS and the state of commercial banks' finances. The specific objectives were: to analyze the impact of internal control systems on the financial performance of commercial banks, the contribution of ICT systems to that performance, and the impact of ERP systems on that performance. Descriptive research design was used. As a result, 167 employees were chosen as a sample size out of the 289 listed employees from First Community Bank and Dubai Islamic Bank using the proportionate stratified random sampling technique. Using Yamane's procedure, a 95% confidence level and 5% confident interval were used to get the sample size. The contingency theory, the agency theory, and the resource-based view theory guided the study. Inferential and descriptive analysis were done. Information gathered was presented in tables, graphs and figures. Internal control system was statistically significant in explaining financial performance (β =0.493, p < 0.05), internal control system was significant to financial performance of the identified commercial banks (r=0.836, p=0.000). Results indicated a positive relationship between ICT and financial performance of commercial banks (β =0.226, p < 0.05). Similarly, there was a positive and significant association between ICT(ICT) upon the development of commercial banks' financial performance (r=0.765, p=.0.000). ERP system was statistically significant in explaining financial performance (β =0.257, p < 0.05). ERP systems had a positive and significant correlation with commercial banks' financial performance (r=0.715, p=0.000). This study concludes that internal control systems serve an important role in supporting performance of commercial banks. Internal control systems allow commercial banks to provide accurate and timely financial data. Financial institutions performance is greatly influenced by ICT. ERP is a key factor in the high performance of financial institutions. This study recommended that commercial banks take proactive steps in establishing robust internal control systems that have the capacity to greatly enhance accountability within their operational frameworks. Commercial banks should not only acknowledge the importance of ICT but to actively prioritize substantial investments in cutting-edge ICT systems. This study recommends that commercial banks integrate robust ERP systems into their operational framework in order to achieve and maintain optimal performance levels.