Effect Of Management Accounting Practices On Financial Performance Of Commercial Banks In Kenya

Abstract

Management Accounting has long been associated with giving management explanations for the intrinsic management functions, specifically in the manufacturing zone. This may have narrowed its utilization in the utilities industry as a tool to be used to improve financial performance where intrinsic and extrinsic trade advice could be required for strategic planning. The objective of the study was therefore to investigate the effects of management accounting practices on financial performance of banks in Kenya. This study adopted a descriptive survey design. The target population for this study was the 42 banks in Kenya. The study collected primary data from the partakers through a structured Questionnaire. The secondary data was obtained from the financial statements. Analysis was done using Statistical Package for Social Sciences (SPSS V 24). The research findings established that commercial banks in Kenya often use management accounting practices in their daily operations. From the descriptive statistics it became clear that total quality management ranked highest as mostly used practice (mean of 3.58), planning and control followed (mean 3.52), performance evaluation followed (mean 3.48), Strategic analysis and process re engineering(mean 3.46), info for decision making followed(mean 3.41), costing followed(mean of 3.36) and finally budgeting (mean of 3.34). The research further revealed that management accounting practices have a 62.2% significant effect on the financial performance of commercial banks in Kenya. F statistic was significant at five percent significant level. These findings were consistent with prior researches.