University of Gondar

College of Business & Economics

Department of Accounting and Finance

The Role of Accounting Information system on organizational performance (In The Case of
government and private commercial banks In Gondar city)

A Research Proposal Submitted in partial fulfillment of the requirement for the master’s
degree in Accounting and Finance)

By: Haimanot Tadege

GUN/ID 7086

Principal Advisor: Meseret Milargeh(PhD Candidate)

Co-advisor: Birhan Mesfin (MSc)

February, 2018

Gondar, Ethiopia
 Table of Contents

Table of Contents
CHAPTER ONE.............................................................................................................................. 2
1. Introduction ....................................................................................................................2
1.1. Background of the Study ...................................................................................................... 2
1.2 Statement of the Problem ..................................................................................................... 3
1.3. Objectives of the Study ............................................................................................................ 6
1.3.1. General Objective of the study ........................................................................................ 6
1.4. Research Questions .................................................................................................................. 6
1.5. Significance of the study ...................................................................................................... 7
1.6. Scope of the Study ................................................................................................................ 7
1.7. Organization of the study ..................................................................................................... 7
2. Literature review ...................................................................................................................... 8
2.7. Conceptual frame work for the study .......................................................................... 16
3.1. Research Design ................................................................................................................. 17
3.2. Research Approaches ......................................................................................................... 17
Population of the Study ................................................................................................................. 18
3.4.1. Target population .......................................................................................................... 18
3.5. Sampling Method ................................................................................................................... 18
3.5.1. Sample size ................................................................................................................... 19
3.5.2. Sampling Procedure: ..................................................................................................... 19
3.6. Method of Data Collection ..................................................................................................... 20
3.7. Data Analysis Methods .......................................................................................................... 21
3.8. Ethical Considerations ............................................................................................................ 23
REFERENCE ................................................................................................................................ 24
1
CHAPTER ONE

1. Introduction
1.1. Background of the Study

Accounting is a process which with the help of accounting records produces financial
statements. The accounting information system is considered to be one of the most
important systems of any organization. Its objective is to provide necessary information
to the managers at different levels. This information helps them in discharging their
responsibilities in an effective and efficient manner in the areas of planning, resource
control, performance evaluation and decision making. (Saeidi, 2014). Information
communication technology has become a majorly tools for rendering or providing a
competitive advantage for companies, most especially banking industries, financial
institutions and the accounting professions, in terms of the number of computers in use
and the level of information technology infrastructure (Odubanjo, 2009).

Banks expanded their work and their functions to the new aspects emerged from the
diversity of business and banking services in the world. The changing strategies of banks
in attracting and maintaining clients and the use of accounting information systems,
modern and sophisticated to keep Clients' funds and provide the expected return and,
thus, increase the profit rate of return earned by the banks. The applying of accounting
information systems have evolved and advanced the progress of technology in the world.
(Wedyan, 2012).

The banks use these new technologies to help in providing data processing and
information suitable for speed of the variables in the markets of the world's economic and
financial, which helps to provide the financial information of banks and accounting
appropriate for the purposes of planning, controlling and decision-making and to achieve
an integrated vision of the potential of commercial banks and optimize the use of
available resources. It will take time and effort for the financial analyst, offering
programs of modern information and rates may help to keep up with events and changes,
and take appropriate decisions in time.

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As many of the clients of those banks are turning to for advice and consultation on the
assumption that these banks do their work on the basis of scientific and technical studies
and to provide experiences of a deeper and broader than they have available. And
because it also aimed to maintain its clients and their services they should provide all data
and information they need accuracy, speed and at the appropriate time.

Under these requires the banks should to realize the importance of using accounting
systems developed with the effectiveness and efficiency affect the internal and external
environment for banks is positive and thus achieving the objectives and increase
organizational performance (Wedyan, 2012).

1.2 Statement of the Problem

Accounting speaks the language of business as it records all transactions of an individual

firm or other bodies that can be expressed in monetary terms. Predicated on the going
concept, accounting is the scheme /arrangement/ and art of collecting, classifying,
summarizing and communicating data of financial nature required to make economic
decisions (Arneld & Hope, 1990).

Banks are key players in financial market systems and play an important role in keeping a
country’s economy running efficiently. In today’s highly competitive environment, the
accounting system of any organization is responsible for providing qualitative
information to assist managements in their decision making process. The success or
failure of business depends largely on the quality of decision made by management and
the quality of decision made depends on the availability of up-to-date data concerning the
business (Joseph, 2013). As a result, accounting information systems (AIS) are
considered as important organizational mechanisms that are critical for effectiveness of
decision management and control in organizations (Sajady et al., 2008).

Accounting information system is a system used to record the financial transactions of a

business or organization. This system combines the methodologies, controls and
accounting techniques with the technology of the IT industry to track transactions provide

3
internal reporting data, external reporting data, financial statements, and trend analysis
capabilities to affect on organizational performance (Elena et al, 2010).

Traditional way of recording, summarizing and reporting company financial reports led
to less optimal decisions and Poor accounting information endanger organizational
performance, which makes managers inefficient administratively that affects the financial
performance, non-financial performance of operating in selected private and government
commercial banks.

As far as previously done local researchers’ knowledge were concerned, those who have
done studies on banking sector, were mainly concerned on the factors that affect financial
performance of banks particularly the profitability aspects only (Eden, 2014; Tesfaye,
2015 & Shibiru, 2014). In spite of the above achievements, in the above research works,
the methods used to examine bank performance is Return on Equity (ROE). However, the
ROE disregards the higher risk that is associated with a high leverage (Bikker & Bos,
2008).

In addition, Semu (2013) examined the performance of banks by using an indicator on

return on asset (ROA). Moreover, Shibiru (2014), conducted comparison between pre
and post bill periods in terms of profit average growth rate of private banks. The above
research works used financial ration method and net income performance profitability
measures to quantify performance of banks. However, both financial ration and net
income method is useful only to conduct financial performance in comparison to previous
periods as well as help to see how well it is doing compared to other banks performance.

Despite all the achievements, the above research works have shown the following gaps
and limitations. Firstly, the effects of AIS on performance of banks were measured
through the perspectives of bank performance at large. Thus, the above studies only
focused on evaluating the general level of banking performance without further
segregating and evaluating the effects of AIS between financial and non-financial
performance of banks.

4
Secondly, the measures employed to verify bank performance was mainly relied on
profitability aspect only. As a result of this, the banking performance at large was not
examined explicitly: Since, the desirable features for bank performance measures should
encompass more aspects (such as financial and non-financial) of the performance
measurement indicators than just being embedded in profitability measures only. Thus,
it is essential to take in to account to the contributions of AIS for non-financial
performance of banks concurrently with financial profitability measures.

Thirdly, methodologically, the above research works evaluated the bank performance
based on only one of the performance measures i.e. return on equity (ROE), financial
ration and net income measures of bank profitability. Hence, limitations in simultaneous
deployment of both ROE and ROA as a financial performance measure were observed in
previous research works.

Fourthly, the above studies used IT alignment and internet banking models to investigate
the quality of AIS. However, these models do not offer a way to measure service quality
of AIS and only useful to measure up to what level IT should be used to enhance service
quality of banks (Nitin et al., 2014). As a result, antecedents banking performance were
missed to be explored.

Finally, the instruments and data collection methods employed to investigate

performance was based on document analysis. Primary information’s from bank
administrative managers, higher officials’ and respective officers were not included as an
informant and thus, the above research works were limited to comprehensively
understood the role of AIS on performance from primary data sources. As a result,
linking of the desirable associations between the role of AIS on performance of banks
(financial and non-financial) were missed to be adequately established through
conducting survey studies.

Thus, the existence of the above gaps and limitations, have led the researcher keen to
examine the role of accounting information system on performance of banks in Gondar
city administration.

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 1.3. Objectives of the Study

1.3.1. General Objective of the study

To examine the role of accounting information system on performance of commercial

banks in Gondar City Administration.

1.3.2. Specific Objectives of the study

 To evaluate service quality of accounting information system in commercial banks

 To evaluate the performance (financial and non-financial) of commercial banks in
Gondar city administration.
 To determine the associations of employing accounting information system on
performance (financial and non-financial) of banks in Gondar City Administration.
 To examine the effects of accounting information system on performance of banks
in Gondar city administration

1.4. Research Questions

The research questions of the study will be

 What is the service quality level of Accounting information system employed by
banks in Gondar City Administration?
 To what extent do banks performance improved after the implementation of AIS
in Gondar City Administration?
 Is there a significant associations between service quality of accounting
information system and performance (financial and non-financial) of banks in
Gondar City Administration?
 Is there a significant effect in service quality of accounting information system
on performance of banks in Gondar city administration?

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 1.5. Significance of the study

This research will conduct with the aim of analyzing the role of accounting information
system on organizational performance. The ultimate /final/ purpose of the study is to
propose or suggest an integrated approach in understanding the accounting information
system in line with their role of organizational performance. The findings will help the
studied bank managers in this research and other banks as well to identify their weakness in
utilization of AIS which brings better organizational performance.

The study will also add knowledge on the role of AIS on organizational performance for
researcher and academic practitioners in further studies. It will also serve as source of
references to other researchers in the field.

1.6. Scope of the Study

The researcher has to define the scope of research in order to make things clear. The
researcher will be focusing this study on the assessment of the role of Accounting
Information System on organizational performance on commercial bank of Ethiopia and ten
selected private banks in Gondar city.

1.7. Organization of the study

This research will be conducted in five chapters: first chapter is the introduction part which
contains background, statement of the problem, objectives, scope, significance, organization
of the study, and limitations of the study. Second chapter review of related literature, third
chapter deals with research methodology. Chapter four will present data interpretation and
analysis and finally conclusion and recommendation will be presented through chapter five.

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 CHAPTER TWO

2. Literature review

2.1. Accounting Information Systems (AIS)

Accounting information systems (AIS) is a tool, which incorporated into the field of
information and technology systems, are designed to help in the management and control
of topics related to organization’s economic-financial area. But the stunning advance in
technology has opened up the possibility of generating and using accounting information
from a strategic viewpoint (El Louadi,1998). Accounting information system (AIS) is
vital to all organizations (Borthick & Clark, 1990;Curtis, 1995; Rahman et al.,1988;
Wilkinson,1993 and Wilkinson et al.,2000) and perhaps, each organization either profit
or nonprofit-oriented need to maintain the AISs (Wilkinson, 2000).

On the other hand, an AIS is the whole of the related components that are put together to
collect information, raw data or ordinary data and transform them into financial data for
the purpose of reporting them to decision makers (LI, 1999). To better understand the
term ‘Accounting Information System’, the three words constitute AIS would be
elaborated separately. Firstly, literature documented that accounting could be identified
into three components, namely information system, “language of business” and source of
financial information (Wilkinson, 1993). Secondly, information is a valuable data
processing that provides a basis for making decisions, taking action and fulfilling legal
obligation. Finally, system is an integrated entity, where the framework is focused on a
set of objectives (Watts, 1999).

Accounting literature argues that strategic success is considered an outcome of

Accounting Information Systems (AIS) design (Langfield-Smith,1997). Several, studies
have analyzed the impact of AIS in strategic management, examining the attributes of
AIS under different strategic priorities (Ittner & Larcker,1997); (Bouwens and
Abernethy,2000). It has also been analyzing the effect on performance of the interaction
between certain types of strategies and different design of AIS (e.g. different techniques
and information).

8
The appropriate design of AIS supports business strategies in ways that increasing the
organizational performance (Chenhall, 2003). Increasing AIS investment will be the
leverage for achieving a stronger, more flexible corporate culture to face persistent
changes in the environment. AIS combines the methodologies, controls and accounting
techniques with the technology of the IT industry to track transactions, provide internal
reporting data, external reporting data, financial statements, and trend analysis
capabilities to affect on organizational performance (GUL, 1991).

Benefits of accounting information system can be evaluated by its impacts on

improvement of decision-making process, quality of accounting information,
performance evaluation, internal controls and facilitating company’s transactions (Bolon,
1998).

2.2. The Role of Accounting Information System

The role of accounting information systems was summaries according (Sealehi, 2011) is
a system that operate functions of data gathering, processing, categorizing, and reporting
financial events with the aims of providing relevant information for the purpose of
storing information keeping inventories records and decision making, and also provides
financial report on a daily and weekly basis. This study have shown that successful
implementation of accounting information systems has benefits, improvement in work
qualities, improved flow of product, improved flexibility, multifunctional ability,
motivation of using software application, problem solving capability of employees,
increased productivity and performance in terms of production cost, and finally increased
emphasis on suppliers integration. All these mentions make accounting information
systems so unique and advantageous in use.

In the past, technology acceptance model (TAM) represents an important theoretical

contribution towards the understanding of AIS (Davis, 1989). The focus on the theory-
based model of TAM by (Davis, 1989) explains computer usage behavior towards the
role of accounting information systems. The goals of TAM also provided an explanation
of the determinants of computer acceptance that are generally capable of explaining user
behavior across a broad range of end- user computer technology and user populations.

9
(Davis, 1993) predicting human behavior and suggests how users come to accept and use
a technology and proposes that when a person is adopting a new technology, a number of
factors such as the perceived usefulness, perceived ease of use, attitude towards u se and
behavior intention can influence their decision about how and when he or she will use it.

Specific measures of each dimension of the Accounting Information System

As the field scholars indicated the Specific measures to evaluate AIS each dimension is
system quality, information quality, system use, user satisfaction and network use. The
description of each service quality is presented with the following table.

System quality  The desirable characteristics of an information

system. For example: ease of use, system flexibility,
system reliability, and ease of learning, as well as
system features of intuitiveness, sophistication,
flexibility, and response times.
Information quality  The desirable characteristics of the system outputs;
that is, management reports and Web pages. For
example: relevance, understandability, accuracy,
conciseness, completeness, understandability,
currency, timeliness, and usability.
System use  The degree and manner in which staff and customers
utilize the capabilities of an information system. For
example: amount of use, frequency of use, nature of
use, appropriateness of use, extent of use, and purpose
of use.
User satisfaction  Users’ level of satisfaction with reports, Web sites,
and support services. For example, the most widely
used multi-attribute instrument for measuring user
information satisfaction can be found in Ives et al.
(1983).

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 Net system benefit  The extent to which AIS are contributing to the
success of individuals, groups, organizations,
industries, and nations. For example: improved
decision-making, improved productivity, increased
sales, cost reductions, improved profits, market
efficiency, consumer welfare, creation of jobs, and
economic development.

2.3. Organizational performance

Organization performance has been the most important issue for every organization, be it
profit or non-profit one. It has been very important for managers to know which factors
influence an organization’s performance in order for them to take appropriate steps to
initiate them. However, defining, conceptualizing, and measuring performance have not
been an easy task. Researchers among themselves have different opinions and definitions
of performance, which remains to be a contentious issue among organizational
researchers (Barney, 1997)

Organizational performance can be defined as the "organization’s ability to attain its

goals by using resources in an efficient and effective manner" (Daft, 2000) or as "the
ability of the organization to achieve its goals and objectives" (Richardo, 2001). Scholars
like Doyle (1994), Robinson (1982) and Galbraith & Schendel, (1983) treated
profitability ratios (Profit margin, return on assets, return on equity, and return on sales)
as the universal measure of performance.

The narrowest idea of performance measurement involves "the use of simple outcome-
based financial indicators that are assumed to reflect the fulfillment of the economic
goals of the firm" referred to as financial performance (Venkatraman and Ramanujam,
1986) which has been the prevailing model in strategy research by (Hofer,1983).
Venkatraman and Ramanujam (1986) further conceptualized a broader idea of business
performance that emphasized on indicators of operational or non-financial performance
such as market-share (Buzzell, Gale, & Sultan, 1975), product innovation, product

11
quality, marketing success, manufacturing value-added and technological competence
replacing conventional financial ratios like ROI, ROA, Cash Flow, Net Operating
Income, ROE, and EPS among others.

"Healthy revenue growth, proper utilization of assets and investment strategy" are the
recipe for organizational success (Hoque et al., 1997). Reliance only on financial
approaches that form a gap between strategy formulation and execution, encouraged
(Kaplan and Norton,1992) to propose the Balanced Scorecard (BSC) as an mechanism to
"link performance measures by looking at the business's strategic vision from four
different perspectives: Financial, Customer, Internal Processes, and Learning and
Growth". The Balanced Scorecard considers the value of intangible assets along with
tangible ones and enables performance management system to reach its aims (Kaplan and
Norton, 2004). The BSC presents a balance of financial and nonfinancial criteria in a
single report while measuring corporate performance in all the dimensions of Balanced
Scorecards (Horngren et al., 2003).

Performance measurement is a persistent issue in modern day banking strategic

management. Banks rely on stable and long lasting client relationships largely reliant on
performance and quality of the employees and their ability to satisfy client needs (Cabrita
and Bontis, 2008). Service performance is found to be one of the very important
indicators of strategic performance management in previous researches (Parasuraman et
al., 1985); (Carman, 1990); (Bolton and Drew, 1991). Superior customer satisfaction
enhances financial performance "by increasing the loyalty of existing customers,
reducing price elasticity, lowering marketing costs through positive word-of-mouth
advertising, reducing transaction costs, and enhancing firm reputation" (Ittner, 1998),
(Anderson, et al., 1994), and (Reichheld et al., 1990).

Banking performance is viewed as a “result more from better implementation, than from
structural competitive barriers” (Bhide, 1986). Banks, therefore, should put greater
emphasis on addressing all the non-financial dimensions strategically related with banks'
overall mission and vision. (Zhang and Li,2009) believed non financial performance

12
measurement to be an integral part of the Chinese banking management. (Fakhri et al.,
2011) and (Wu et al., 2009), in separate research papers, discovered the non-financial
measures raising the banks' value through the introduction of customer, internal business
processes, employee learning and growth dimensions along with financial factors.

2.4. AIS and Financial Performance

The AIS design can be defined in terms of the information characteristics that it provides
(Chenhall et al, 1986); (Gul, 1991).(Chenhall and Morris 1986) described AIS according
to the perceived usefulness of four information attributes, namely scope, timeliness, level
of aggregation, and integration. Scope refers to the measures being used and to the
extension of AIS in time and space. Then information could focus on future vs. historical
events or external vs. internal events. Also the information could be quantified in
monetary or non-monetary terms. Timeliness refers to the frequency, speed of reporting
and the orientation of the information (e.g. short or long run). Aggregation refers to the
way data is aggregated in time periods, functions or in accordance with decision models.
Finally, integration refers to the need of providing information to reflect the interaction
and coordination effects of several functions in the organization. These four attributes
have been analyzed for comparing AIS and organizational strategies and performance
(Gerdin and Greve, 2004).

Only recently have studies begun to examine whether organizations systematically vary
the AIS design to support their chosen strategy, recognizing that AIS have the potential to
facilitate strategy management and enhance organizational performance (Gerdin and
Greve, 2004). Appropriate review between designing of AIS and performance of
commercial units by analyzing strategies explains that high performance of commercial
units depends on a wide range of accounting information systems (Boulianne, 2007).

13
Existing literature offers scant evidence of the relationship between these AIS and
financial performance; though it is important to highlight the study made by (Grande et
al., 2010) which discovered a positive association between AIS design and organizational
strategy and performance. The successful implementation of AIS could save
shareholder’s money and time. The information value generated by AIS to shareholders
and stakeholders in making investment decisions (Sori, 2009).

2.5. AIS and Performance Management

Existing literature offers scant evidence of the relationship between AIS and performance
management. Accounting information systems are considered as important organizational
mechanisms that are critical for effectiveness of decision management and control in
organizations (H. Sajady., et al, 2008). Accounting Information System (AIS) as one of
the most critical systems in the organization has also changed its way of capturing,
processing, storing and distributing information. Nowadays, more and more digital and
on-line information is utilized in the accounting information systems (Huang et al., 1999
and Clikeman, 1999).

Performance management (PM) includes activities that ensure that goals are consistently
being met in an effective and efficient manner. Performance management can focus on
the performance of an organization. Accounting systems affect behavior and performance
management and have affects across departments, organizations, and even countries
(Conway, 2009). Baron (1998) Accounting systems are often the most important formal
sources of information in industrial organizations. They are designed to provide all levels
of management with timely and reasonably accurate information to effect on performance
management and help them make decisions which are in agreement with their
organization’s goals (Anthony, 2006).

Organizational performance is one of the most important constructs in management

research (Richard, 2008). Thus, the relationship between AIS and organizational
performance would be moderated by the performance management. According to the

14
pervious argument we analyze the contingency fit between AIS, performance
management and organizational performance using accounting data, decision making and
internal control process.

2.6. Non-financial measures usage and organizational performance

Firms are increasingly implementing new PMS to evaluate managerial performance and
to track non-financial metrics such as customer and employee satisfaction, product and
service quality, market share, productivity, and innovation (Ittner et al., 1996). Jusoh, et
al (2008), Shah, (2009) argued that non-financial performance measures are more future-
oriented than traditional financial measures, thus managers rely heavily on them in
making decisions that will benefit their organizations in future.

However, several recent studies linking non-financial measures of performance to

organizational performance have produced mixed findings (Hoque, 2005). (Ittner et al.,
1996). Did not find a positive relationship between non-financial measures of quality and
customer satisfaction and organizational performance. (Ittner.,et al 2003). Found that
using non-financial measures is associated with improved performance assessed by only
a one-year stock return but not with that assessed by ROA, sales growth and a three-year
stock return. Furthermore, (Hoque, Z. 2005) found that the direct effect of the use of non-
financial performance measures on organizational performance is not significant.
Recently findings by (Jusoh, R., et al 2008) revealed that using non-financial measures
of internal business process and innovation and learning led to improved organizational
performance.

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2.7. Conceptual frame work for the study

INDEPENDENT
variables

System quality
DEPENDENT
FACTORS
Information system

Service quality
Financial performance

System use Non-Financial performance

Performance management
User satisfaction

Net benefits

Figure1. Research model for the study (Developed for research purpose, 2017)

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 CHAPTER THREE

3. Research Methodology

This chapter presents the detailed plan of how the study will be conducted. It includes
Research design, Research approach, data source and collection methods, sampling
design, and data analysis.

3.1. Research Design

A research design encompasses/includes the methodology and procedures employ to

conduct the research. The design of a study defines the study type. The researcher
employs explanatory study approach which allows for intensive investigation of most
important factors in the units of study (Kothari, 1990). On the whole, this research design
facilitates a better understanding of the role of accounting information systems towards
organizational performance.

3.2. Research Approaches

The study will use descriptive research methods and both, quantitative as well as
qualitative data collection methods can be used in the study. Quantitative aspects which
focus information with numeric nature and select to address the research objective that
aimed to investigate the existing problem through provision of questionnaire to
respondents. On other hand, the qualitative type which helps to analyze with quality
nature and to address research objects through provision of in depth interviews,
guidelines concerned officials and experts. The main data collection method for the study
will be questionnaires. This is mainly due to the fact that it is effective mechanism for
efficient collection of information it is closed question types and it prepared to obtain

17
factual information and relevant responses. The structured questionnaires will be
prepared in English and then distributed to sample respondents.

Population of the Study

The research will mainly study the problem based on data from the targets of the study
i.e. employees and managers in banks that are found in Gondar City Administration.
Therefore, private and government bank employees will be population of the study that
the researcher thinks them to provide relevant and valid data to the study.

3.4.1. Target population

The target population of the study will be officers in private and commercial bank
branches in Gondar City Administration. Based on this employees in Dashen and Hibret
and Comertial bank of Ethiopia will be included as a target population of the study.

According to the data obtained from NBE branch of Gondar district, there are a total of
610 employees Based on the data obtained from the bank, in these three branches a total
of 610 employees are active users of accounting information system in different banks.
Therefore, these 610 employees will be used as the target population of this study.

These groups will be targeted because since they are all users of AIS in both the
government and private bank branches and they are the major parts to feel and provide
feedback to the study. Officers were selected since they since they are predominantly
using and experiencing accounting information system in a daily basis.

3.5. Sampling Method

In this study, so as to analyze the role of ASI service quality on performance of banks,
the sampling method will be determined based on the data obtained from the bank, 3
branches total of 610 officers are actively using Accounting information system as their
day to day activity.

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3.5.1. Sample size

The sample size is detemined as in the following (Fowler, 2002 as cited in

Achenafi,2008:28):

So the formula is: n ,

Where

N=total population i.e. customer care employees in Mintewab, Dashen and Hibret branch,

n= total sample size,

e=precision degree/ error (5%=0.05). Therefore, the sample size is:

n= 610
1+610 (0.05)2

= 610
1+610 (0.0025)

= 610 = 241.584
2.525

n=242

Therefore, 242 sample officers will be selected to the purpose of this study.

3.5.2. Sampling Procedure:

Stratified simple random sampling technique will be employed in order to collect the
necessary data from respondents. The researcher selected this technique believing that the
technique provides relevant options and equal proportions of distributions of sample
respondents.

With regard to stratified random sampling, since the total number of 610 employees are
found into three different branches, the distribution of respondents in each of the

19
selected three branches should be proportional to the three of branches and thus, banks
will be used as a strata.

Then the researcher will adopt proportionate stratified sampling to know the number of
samples drawn from these 610 accounting information system users in each branch and
calculated below. Then the distribution for each stratum will be presented with the
following table below

Number of
No of officers sample size
Dashen bank 99 39
Hibret bank 79 31
Commercial bank 432 171
610 242
Source: - CBE branch report (2016), researchers compile.

Then the researcher adopts proportionate sampling to know the number of samples in
each stratum, each respondent will be selected randomly in each stratum in order to fill
out the questionnaire.

3.6. Method of Data Collection

To conduct the study both primary data and secondary data sources will be used.
Multiple data gathering instruments will be used to collect valid and reliable information
from the research participants of the study. The primary data will be collected through
questionnaire. The main data gathering instruments to collect primary data that will be
used in the study is a survey questionnaire.

Questionnaire: questionnaire will be used to collect the quality of service of ASI and
performance of bank. To do this standardized questionnaire will be adopted and on the
basis of the relevant information from the review of related literatures.

20
The interviews will be tape-recorded in order to be transcribed and translated for data
analysis, and the questionnaire will be pre-tested to make the necessary changes, if any,
on the questions which might create ambiguity on the respondents ‘side.

Moreover, secondary data sources of will be used to examine the financial performance
of banks. Thus ROE and ROA will be calculated based on secondary data. This will be
obtained from the bank’s annual report. Based on the data profitability measures of ROE
and ROA for each banks will be calculated and the financial performance of the banks
will be examined.

In addition, the Validity and reliability of the instrument will be verified using Cronbach
alpha. Before its actual administration, the questionnaire will be pre tested using some
randomly selected respondents other than that will be included in the sample.

3.7. Data Analysis Methods

The questionnaire data will be processed through computerized software such as SPSS
version 20 and analyzed using quantitative analysis methods.

In order to calculate the financial performance of banks, the profitability measures of

ROE and ROA will be calculated by using the following formulae.

The return on assets (RoA) is the net income for the year divided by total assets, usually
the average value over the year.

Return on Assets = net income / average total assets

In calculating the ROE, the first element is the net profit margin and the last corresponds
to the financial leverage multiplier.

Return on Equity = net income / average total equity

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The cost-to-income ratios shows the ability of the institution to generate profits from a
given revenue stream. Impairment charges are not included in the numerator.

Cost-to-income ratio = operating expenses / operating revenues

Finally, the net interest margin is a proxy for the income generation capacity of the
intermediation function of banks.

Net interest margin = net interest income / assets (or interest-bearing assets)

Thus, by employing the above profitability measures, the financial performance of the
selected branches will be calculated and analyzed.

In addition to this, quantitative data that will be collected from questionnaire and will be
analyzed thorough multiple inferential statistical analysis techniques (one sample t-test,
and multiple binary regression).

One sample T-test will be used to analyze the levels of organizational performance and
service quality of AIS.

On the other hand, binary regression model will be employed to test whether the
implementation of service quality of accounting information systems have an association
with either the financial and non-financial performances of the bank.

To do this a binary dependent variable of improved financial and non-financial

performance will be used as a binary dependent variable. Moreover, service quality
variables of the AIS will be used as independent predictors.

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3.8. Ethical Considerations

In the process of the study, the following ethical issues will be considered. In order to
obtain an informed consent from the respondents, the purpose of the study will be
explained clearly. The objectives on the effects of e-payment service quality on customer
satisfaction will be asked to give their informed consent orally before filling out the
questionnaire or participating in any discussion. Information obtained from the
respondents will be promised to be kept confidential. Necessary efforts will be made so
that the languages in the data collection tools will consider the culture, religion and the
comprehending level of the respondents.

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