The Benefits of Computerized Accounting and Financial Reporting in Banks

Abstract

In this study, computerized accounting system in the banking sector is investigated to study how such systems impact key financial metrics of the banking sector, particularly how technological advancement affects operational efficiency and the bank's financial performance. The investigation employs a quantitative research methodology and uses a robust dataset that is composed of secondary datasets from annual reports of various banks from 2019 to 2023. The major independent variables of interest are Net Interest Margin (NIM), Return on Assets (ROA), Return on Equity (ROE), measures of financial health and efficiency. Using advanced econometrics as advanced as the two-step system Generalized Method of Moments (GMM), it allows for addressing potential endogeneity and getting unbiased and adequate estimators. The observations document impressive enhancements of the financial performance associated with computerization. Incorporation of these technologies into banks increases profitability, improves the banks’ asset management efficiency, and enhances the bank’s equity returns as opposed to those without these technologies. The findings highlight the value of the technological integration in facilitating not only financial performance, but also strategic decisions who are involved in the banking industry. The empirical evidence of how digital transformation can enhance financial reporting and operations in banks provides new knowledge that needs to be considered in the literature, which suggests that they should prioritize investing in technology in order to maintain competitive advantage and operational resilience.