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العنوان
The Impact of Adopting BSC on Earnings Quality :
المؤلف
El-Mehy, Shaimaa Sayed Mohamed.
هيئة الاعداد
باحث / شيمــاء سيــد محمــد الميهــى
مشرف / زكريا فريد عبدالفتاح
مشرف / محمــد علــى لطفـي
مناقش / محمد حسن عبد العظيم
تاريخ النشر
2018.
عدد الصفحات
159 p. :
اللغة
الإنجليزية
الدرجة
ماجستير
التخصص
الإدارة العامة
تاريخ الإجازة
1/1/2018
مكان الإجازة
جامعة عين شمس - كلية التجارة - المحاسبة والمراجعة
الفهرس
Only 14 pages are availabe for public view

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from 159

Abstract

Nowadays, Banks are facing severe competition and challenges to cope with speedily development in markets. So, banks have to adopt a comprehensive performance management system like balanced scorecard to be able to compete and survive.
Banks have to not focus merely on financial indicators only. It is essential to give more attention to non-financial measures as well in order to be satisfied with the banks performance.
Therefore, Commercial banks should not only focus on using quantitative measures such as profitability and liquidity but also should take into concern qualitative measures like customer service, internal process and human capital development. Balanced scorecard can provide support in integrated both qualitative and quantitative measures.
Balanced scorecard takes into consideration also the rapidly changing environment as it takes long term development into account which helps banks to use long term strategies,
This study examined the effect of applying balanced scorecard on bank’s earnings quality. Results of the study can be summarized as follow:
The validity of the study hypothesis was tested by using some statistical methods such as variance analysis, coefficient correlation and multi regression test. These hypotheses have been proven and they are:
A. There is a significant relationship between non-financial measures and banks’ earnings quality.
B. There is a significant relationship between applying strategy map and banks’ earnings quality.
5/2 Conclusions
The study discussed the impact of implementing the BSC on earnings quality. The study indicates that customer perspective has a significant effect on increasing banks’ earnings quality as the value of Beta coefficient was 0.393. Learning and growth perspective has also a significant effect as the value of Beta coefficient was 0.264. While the results of multi regression while testing the effect of non-financial measures shows that R2 equal 0.745 which means that there is efficiency while applying balanced scorecard model. The remaining percentage is explained by other variables not included in the study in addition to the random errors resulting from the method of sample collection and accuracy measurement.
The results of multi regression when testing the effect of financial measures on earnings quality shows that R2 equal 0.90 which means that there is a significant effect between financial measures and increasing earnings quality. The financial perspective still have the largest impact due to the huge concentration from the top level managers on financial measures, so other perspectives need to have more concentration to get the maximum benefit from them.
The study resulted also in:
1- Employees’ evaluation system is not related to achieving goals and is not useful but it subjects to the standards of seniority and the priority of promotions.
2- The bank is committed to customers’ requirements and offers a wide range of banking services.
3- The ease of working procedures is not significantly convenient to all customers.
4- There is a correlation between the different perspectives of the BSC and each other, which indicates the access to the satisfactory results from the use of the BSC to have a significant impact on each other.
Sagar (2012) implies that performance of a bank cannot be evaluated only on the basis of its profit. Thus, using the other indicators, as defined through the four perspectives of the BSC, definitely yields better performance evaluation.
Mandy (2012) shows that the BSC framework has broader implications for organizational decision-making by clearly articulating an organization’s strategy to managers, the strategy map allows managers to form a more useful cognitive representation through which external information items can be interpreted and incorporated in strategic judgments.
Colm (2012) demonstrates that the BSC is an effective tool for translating strategy into high-level performance measures. Organizations need a robust link between strategy and effective strategy execution.
Mike (2014) indicates that the BSC is a powerful tool, that when applied in an appropriate manner may have significant benefits for the organization in question. However, it must be understood that the BSC cannot be thought of as a miracle tool that will somehow improve the performance of a struggling firm. BSC can help in effectively managing its performance by providing clearer answers around the question “How are we performing?” The particular version of the BSC chosen for implementation must be carefully matched to the needs of the organization in order to ensure success.
5/3 Recommendations
Based on the study results the researcher suggests the following mechanism to be followed by banks in order to enhance its earnings quality.
Banks need to establish a department which will setup balanced scorecard management system and ensure effectively implementation and feedback in order to develop a comprehensive strategy with financial and non-financial objectives
Try to cope with information technology in order to effectively implement the balanced scorecard as a comprehensive performance measurement approach.
To clearly clarify and communicate the strategy of the bank to all employees at the various administrative levels and the important objectives that they must achieve in order to encourage all employees to participate effectively in the development of the strategy and to benefit from their experience in banking sector to maximize the earning quality. The failure of effective communication between the various administrative levels of the bank has a negative impact on the relationship between the senior management and the executive levels, and creates a significant difference between their views and thus lack of desire for change or development which will have a negative effect on increasing earnings quality.
The development of a quality program that applies to all different units and sectors of the bank and is subject to the supervision of the quality management of the bank with the continuous modernization of the quality program to cope with the current and future needs. And consist on the policy of continuous training for the employees on how to use the balanced scorecard model to create capable employees to deal with the new variables. The trainings plans have to develop on actual training needs not due to pre-programmed programs.
Achieving customer satisfaction depends on the development of banking services provided to customers in order to achieve competitive advantages over competitors to ensure the success of the bank in achieving earnings quality. Executive managers have to pay attention to the employees who are related to the relations with the customers and improve their experience.
Activating the role of the Research and development department of the bank and taking advantages of the employee’s thinking and encouraging them to innovate in all banking fields.
As any organization uses a performance measures system, it is expected that there are banks using some elements of balanced scorecard measures either knowingly or unknowingly; they customize it according to their needs.
5/4 Further researches
The research is recommended to carry out more research and studies on different banks where there are no standard solutions for all banks due to the different internal and external factors.
1- A proposal real life comprehensive experiment for formulating BSC strategy in the Egyptian Banking sector.
2- Performance evaluation measures in the Egyptian Banking sector “A deep look on BSC implementing obstacles”.
3- Designing a BSC to measure the Egyptian Banking performance “A comparative study between the Egyptian Banking sectors”.
4- The impact of Floatation on the banking industry “An Applied study on the Egyptian Banking sector”.
The research need to be replicated and extended to other banks. Further research is needed to understand whether there are other perspectives that affect banks’ earnings quality. Extended the research to bank employees’ and customers will support and help to develop more robust banking sector in Egypt in future.