Impact of management accounting practices and financial performance of citizens bank international limited

Abstract

This study looks at the level and efficiency of management accounting practice in Citizens Bank International Limited and its connection with financial performance at the branch level. 56 managers and officers were surveyed using a structured questionnaire on budgeting, costing, performance measurement, decision support and management reporting, along with three semi-structured interviews and three years of published financial statements to collect primary data. The results of reliability demonstrate that all the constructions have acceptable internal consistency. Descriptive statistics imply that all management accounting practice indices are above the neutral middle point, and performance measurement and reporting are significantly stronger and advanced costing is weaker. Correlation analysis shows that management accounting dimensions are strongly positively correlated as well as with perceived performance. Simple regression outcomes indicate that the overall management accounting practices index accounts approximately forty five percent of the variation in perceived performance with multiple regression findings that the five dimensions together account for approximately 59 percent with performance measurement indicating the only significant individual predictor. Financial statement analysis indicates that assets, deposits and loans have been increasing, yet the profitability measures, like, the return on assets, return on equity and earnings per share are decreasing, and non-performing loans have been on the rise, which reflects a difficult operating environment. Evidence of the interview confirms that there is structured budgeting, periodic variance analysis and branch profitability reporting, but also finds that there are gaps in participative budgeting, granular costing, decision support tools, system integration and staff capabilities. In general, the results indicate that more robust management accounting systems are linked to a perceived higher branch performance, and additional reinforcement of performance measurement, costing, decision support, and capacity building may contribute to more sustainable financial results. The research adds Nepal specific evidence to the broad literature on banking management accounting practices.