| dc.description.abstract | The methods and techniques of quality management are spreading at an ever-increasing
rate throughout all aspects of business banking sector. This spread is fuelled by many
factors: Legislative, Competitive, Marketing, Aesthetic, Reliability and Financial.
The factors listed above are of varying degrees of measurability. and will have different
degrees of importance depending on the nature of the commercial banks. It is the last of
these factors - financial that is investigated in this project.
The project compared quality improvement with financial performance in an attempt to
establish the link if any between quality and bank profitability. Information gathered by
interviewing bank personnel inferred that establishment of a quality service
department/customer services can be regarded as a point on a scale of progression
towards improved quality. Initial establishment of quality services department/customer
service dates were therefore used as a proxy indicator of the quality of banks. The
relationships between financial performance of banks and quality improvement was
computed and compared for all commercial banks, over a period of five years: 1998 -
2002. The sample, which consisted of 46 commercial banks, was drawn from private and
public banks filing independent (i.e. non- consolidated) accounts. This method was used
to ensure that the financial records being examined were as closely associated to the
scope of the quality management systems as possible.
The performance of the banks was monitored using a set of indicators including liquidity,
leverage, profitability and efficient on productivity. The data collected gives fairly weak
evidence that quality improvement variables enhance financial performance for
commercial banks. There was evidence that establishment of quality service
department/customer service is taking place by commercial bank sector cohort, with the
result that an initial period of success may be quickly blunted as competitors also gain
through quality improvement establishment. Thus any financial benefit gained through
quality improvement may be quickly lost as competitors follow suit. •
This project reached the following overall conclusion: -.
• Quality initiatives result in fairly weak improved financial performance, the
evidence of the research indicate that a clear but weak link exists.
• Quality improvement does appear to have short term or direct effect on financial
performance There are undoubtedly other benefits to be gained from improved
quality, but they may be very difficult to measure.
In addition to expanding the analysis undertaken in this research project, other areas for
future investigation include detailed study by size of the bank, detailed study of industries
i.e. financial industries sector to include micro-finance, building societies, insurance
companies, use of alternative quality indicators and extending the time period. | en |
