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THE IMPACT OF ACCOUNTING INFORMATION SYSTEM ON THE PERFORMANCE OF BANKING SECTOR IN NIGERIA (A CASE STUDY OF FIRST BANK OF NIGERIA PLC)

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THE IMPACT OF ACCOUNTING INFORMATION SYSTEM ON THE PERFORMANCE OF BANKING SECTOR IN NIGERIA

(A CASE STUDY OF FIRST BANK OF NIGERIA PLC)

TABLE OF CONTENT

TITLE PAGE --------i

DECLARATION -------ii

CERTIFICATION -------iii

DEDICATION --------iv

ACKNOWLEDGEMENT ------v

TABLE OF CONTENT-------ix

ABSTRACT --------xiv

CHAPTER ONE:

INTRODUCTION

BACKGROUND OF THE STUDY----1

STATEMENT OF THE PROBLEMS----3

RESEARCH QUESTIONS-----4

OBJECTIVES OF THE STUDY----4

RESEARCH HYPOTHESIS-----5

SIGNIFICANCE OF THE STUDY----6

LIMITATION OF THE STUDY----6

1.8 DEFINITION OF TERMS---- 7

REFERENCES------- 12

CHAPTER TWO:LITERATURE REVIEW

2.0 INTRODUCTION------ 13

2.1 HISTORICAL BACKGROUND OF BANKING IN NIGERIA 14

2.2 SERVICES OFFERED BY COMMERCIAL BANKS- 17

2.3.1THE COMPUTER REVOLUTION---- 20

2.3.2DEVELOPMENT OF COMPUTER---- 21

2.3.3ELECTRONIC- MECHANICAL PUNCHED

CARD MACHINES------ 22

2.3.4 MODERN COMPUTER SYSTEM ---- 29

2.3.5OPERATRION OF THE COMPUTER --- 32

2.3.6THE COMPUTER ENVIRONMENT---- 35

2.4MEANING OF ACCOUNTING INFORMATION-- 37

2.5RELATIONSHIP BETWEEN BANKING AND

ACCOUNTING INFORMATION SYSTEM-- 45

2.6SAVINGS ACCOUNT------ 56

2.7 ADVANTAGES OF ACCOUNTING INFORMATION SYSTEM IN BANKING------ 63

2.8LIMITATION OF ACCOUNTING INFORMATION ON BANKING -------- 68

REFERENCES------- 72

CHAPTER THREE: RESEARCH METHODOLOGY

3.1 INTRODUCTION------ 73

3.2 RESEARCH DESIGN------- 73

3.3 TYPES AND SOURCES OF DATA---- 75

3.4 METHOD OF DATA ANALYSIS---- 76

3.5 DATA ANALYSIS TECHNIQUE---- 77

3.6 MODEL SPECIFICATION------ 77

3.7 DEFINITION OF VARIABLES ----- 79

CHAPTER FOUR: DATA PRESENTATION, ANALYSIS AND INTERPRETATION

4.1 INTRODUCTION------ 82

4.2DEFINITION OF VARIABLES---- 83

4.3 DATA PRESENTATION----- 43

4.4DATA ANALYSIS AND INTERPRETATION-- 87

CHAPTER FIVE: SUMMARY OF FINDINGS CONCLUSION AND RECOMMENDATIONS

5.1INTRODUCTION------ 101

5.2 SUMMARY OF FINDINGS----- 103

5.3CONCLUSION-------104

5.4RECOMMENDATIONS-----105

5.5RECOMMENDATION FOR FURTHER STUDIES--106

BIBLIOGRAPHY-------107

APPENDIX I-------110

APPENDIX 11-------111

APPENDIX III-------113



ABSTRACT

An organization comprises of a combination of various information systems. These various information systems aid the collection of data that is necessary for management to prepare their financial reports that will aid decision making in order to achieve organizational goals and objectives. These systems are sometimes referred to as accounting systems. The type of accounting systems put in place will determine the quality of accounting information generated by such system. In this present day where users of financial statements require quality information to aid their investment decisions, there is the need to determine the impact of such systems on their performances. This study was embarked on to determine the impact of accounting information system on the performance of the banking sector in Nigeria with a particular focus on First Bank Nigeria Plc. Our major objectives were to find out the relationship between accounting information generated from the system with profitability represented by Return on Capital Employed (ROCE) and Earnings per Share (EPS). In order to achieve the objectives, we obtained secondary data from 2001 to 2010 from First Bank Plc and used regression analysis with e-view to analyze the data. The result of the findings shows that there is a positive relationship between Accounting Information generated from the system and Return on Capital Employed and Earnings per Share and a positive relationship between Net profit Margin and Dividend per Share. We recommend that managers should ensure adequate investment in their accounting information system to ensure that quality information is generated from their accounting system.

CHAPTER ONE

INTRODUCTION

BACK GROUND OF THE STUDY

Banking has over the years transformed from the time of ledger cards and other manual filling systems into a system based such as computer based technology. Banking System has moved away from a situation where all activities are manual based such as all transactions are carried out manually; in modern day banking transactions are carried out automatically with the support of ATM (Automated Teller Machine) and other modern technology equipments and this has also help reduce the numbers of crowds in the bank, and enhance and support the operation of banking. (Adekange1986:23-25). With modern day computer technology, Banks now have the ability to delights its customers with superior services and empower a knowledgeable workforce to create and make decisions.

Computer technology base Banks now have the ability to seize opportunities and respond to market changes. They (computerized banks) now also know how to utilize the best of both people and technology and bringing together the best of teams of talent. They (computerized banks), can also provide faster and better services to its customers which can be done in an instant through the use of computer technology. The advent of accounting information system (AIS) in the Nigerian Banking Sector marked the beginning of a new dispensation in banking and has revolutionized traditional banking practices and redefined the entire frontiers of banking as well as the entire work place (Adekange, 1986: 23-25).

Without computers, issues like linkage, universal banking concepts, automated teller machine (ATM) and other innovations would have been unthinkable. The application of computers has improved banking performance; and computers and other information technology have generally been identified as an important tool in attaining corporate goals of delivery services effectively to customers which is crucial to the sustainable growth and profitability of the bank (Brien, 1983:46).

STATEMENT OF THE PROBLEMS

The banking sector plays a major role in any nation especially a country like Nigeria and although it has grown in leaps and bounds over the past decade, the more significant changes would be attributable to the character rather than size.

It is also known that there is the existence of computer fraud in the banking system; these problems need to be combated. Many studies have been undertaken relating accounting information system (AIS) to customer satisfaction and customer perception, relatively few have turned the searchlight into the organization or attempted to discover the perception of banking personnel of information technology or the impact if any or the changes introduced by AIS on organizational behavior (Donald, 1983: 22-26). Therefore, this study will examine Accounting information system in the performance of banking sector in Nigeria.

. RESEARCH QUESTIONS

With the previously stated problems, this research will attempt to provide answers the following questions:

1. Is there any significant relationship between accounting information and corporate profitability in the banking sector in Nigeria?

2. Is there a relationship between accounting information and Earnings per share?

OBJECTIVES OF THE STUDY

The aim of this research is to explain how Accounting Information System has improved the performance on First Bank of Nigerian Plc (FBN) over recent times and years. The specific objectives are to:

Examine the relationship between accounting information system and profitability in The banking sector in Nigeria.

Determine the relationship between accounting information system and Earning per share.

RESEARCH HYPOTHESIS

This purpose is to put the research objectives into testable terms since for a problem to exist there must be an uncertainty over the best alternative for satisfactory attainment. The hypothesis is as follows:

HO: There is no significant relationship between accounting information and Profitability in the banking sector in Nigeria.

HO: There is no significant relationship between accounting information and Earnings per share in the banking sector in Nigeria.

1.6 SIGNIFICANCE OF THE STUDY

The study will show how modern technology has improved banking performance in retail commercial banking. It also investigates how frontline banking personnel has been affected by (Accounting Information System) AIS such as that performance are now with greater speed and efficiency.

The project intends to bring awareness about accounting information and the positive effects on customer’s service delivery in other to improve the flow of transaction.

LIMITATION OF THE STUDY

This research study will be aimed at the efficient and effective impact of accounting information system on the performance of the FBN using Ten year financial statement. The major limitations of this study will be lack of adequate data to cover more years and also some of this secondary data may not be too reliable because there is a general belief that management will only publish financial statements to favors them .



1.8 DEFINITION OF TERMS

Automated Teller Machine (ATM): It is an automatic machine that recognizes a card linked with an account number to dispense cash.

Bank: Financial institution where money and other valuable goods are kept by concerned owners for safe custody.

Cheque: The conditional order in writing by which you instruct your bank to pay on demand a sum from your current account to a named person or bearer.

Customers: It refers to individuals who have the capacity to deal with banks.

Computer: Is a data processing device that can perform substantial computation, including numerous arithmetic or logic operations without intervention by a human operator during the processing.

Electronic Fund Transfer (EFT): It is the development of banking and payment systems which transfer funds electronically instead of using cash or paper documents such as cheque.

E-Banking: It can be defined as automated delivery of new and traditional banking practices and services directly to customers through electronic, integrative communications channel.

E-Commerce: which means “Electronic Commerce?” is the buying and selling of goods and services on the internet, especially the World Wide Web. This term is also used as interchangeably with E-business.

Global System for Mobile Communication (GSM): This is a digital cellular phone technology and it is the most popular standard for mobile phones in the world.

Information and Communication Technology (ICT): This is defined as an umbrella term that includes any communication device or application, encompassing: cellular phones, computer, network hardware and software, satellite systems and so on as well as the various services and applications associated with them, such as distance learning and video conferencing.

Information Technology (IT): This is that which comprises of computers, satellite communications, videotext, network, cable television, software and automated office equipments, electronic mail (e-mail).

Internet Service Provider (ISP): It refers to a company that sells access to the internet, allowing computer users to send electronic mail (e-mail) and browse the World Wide Web (WWW) among other tasks.

M-Banking is also known as ‘Mobile banking’ is a term used for performing balance checks, payments, account transactions, viewing recent transactions etc via a mobile device such as a mobile phone.

Online Processing: It enables the users to input data to the computer receive back result almost instantaneously.

Re-Engineering: Is the fundamental rethinking and redesign of an entire business system or dramatic improvement in quality, speed and services.

Technology: Is referred to the scientific study and use of applied sciences otherwise the application of this to practical tasks in industry.

Services: Is the benefit derived by banks customer as a result of the over the counter and other transactions.

Tele-communication: Is referred to communication through technology devices such as radio, cables, television, telephones, fax machines etc.

V.SAT: very small aperture terminal.

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