ODA BULTUM UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF ACCOUNTING AND FINANCE

ROLE OF BANK BASED INFORMATION SYSTEM IN MANAGERIAL DECISION (A

CASE STUDY ON COMMERCIAL BANK OF ETHIOPIA CHIRO BRANCH)

A RESEARCH PAPER SUBMITTED TO DEPARTMENT OF ACCOUNTING AND

FINANCE FOR PARTIAL FULFILLMENT OF THE REQUIREMENT FOR B.A.
DEGREE IN ACCOUNTING AND FINANCE

PRE PARED BY: AHAMADO ABRAHIM

I D NO 0905/10
ADVISOR: TESFAE FISEHA

DECEMBER, 2020

CHIRO, ETHIOPIA
 ACKNOWLEDGMENT
First and for most, I would like to express my sincere thanks Almighty God, the merciful who
helped me throughout my life. Next my deepest gratitude goes to my advisor Mr. TESFAE
FISEHA for his helpful and critical advice. Finally, I would not forget the valuable moral and
financial support made by my family and to my friends for their appreciation.
 Abstract
This study is focused on the role of bank based information system in managerial decision on
commercial bank of Ethiopia. The main objective of the research was to examine the role of AIS
on the administrative quality of commercial bank of Ethiopia..

To conduct this study, the researcher were used both of primary and secondary data. The primary
data were be collected from questionnaire and interview of the employees of commercial bank of
Ethiopia Chiro Main Branch.

Finally, the researcher was find out the result based on the collecting data and would recommend
the expecting possible solutions.
 Acronyms
AIS- Accounting Information System

CBE- Commercial Bank of Ethiopia

ATM- Automated Teller Machine

IT- Information Technology

MIS- Management Information System

CATS – Customer Accountant and Transaction Service

TS- Trade Service

CSM- Customer Service Manager

CSO- Customer Service Officer

ICT -Information and Communication Technology

 Table of Contents

Table of Content……………………………………………………………………………………………………………..…I
CHAPTER ONE…………………………………………………………………………………………………………………1
I. INTRODUCTION…………………………………………………………………………………………………………….…1
1.1 Background of the study ................................................................................................. 1
1.2 Statement of the problem.................................................................................................3
1.3 Research questions .........................................................................................................4
1.4 Objective of the study .................................................................................................... 4
1.5 Significance of the study …………………………………………………...…………………………………........4
1.6 Scope/Delimitation of the study …………………………………………………………………………………..5
1.7 Organization of the study ............................................................................................. 5
CHAPTER TWO……………………………………………………………………………………………………………………6
2. REVIEW OF RELATED LITERATURE .................................................................................... 6
2.1 Theoretical reviews ......................................................................................................... 6
2.1.1 Information system ................................................................................................. 6
2.1.2 Accounting information system ...............................................................................6
2.1.3 The role of AIS in banks ....................................................................................... ….8
2.1.4 AIS and decision making .......................................................................................... 8
2.1.5 AIS and their effect on management .......................................................................11
2.1.6 Thought on Related Theories or Models…………………………………………………………….…….13
2.2 Empirical Reviews ............................................................................................................14
2.2.1 Empirical Studies on External Banks……………………………………………….14
2.2.2 Empirical Evidence on Banks in Ethiopia………………………………...............15
CHAPTER THREE…………………………………………………………………………………………………………………16
3. Research methodology ......................................................................................................16
3.1 Background of the study area…………………………………………………………………...17
3.2 Research design .............................................................................................................. 17
3.3 Data types and source ................................................................................................ ….17
3.4 Method of data collection .......................................................................................... ….17
3.5 Total Population and Sample Size………………………………………………18
3.6 sampling technique .......................................................................................................17
3.7 Data analysis methods .................................................................................................17
CHAPTER FOUR………………………………………………………………………………………........................ ...18
4. DATA ANALYSIS AND INTERPRETATION .............................................................. 16

4.1 Case Presentation and analysis ........................................................................ 16

4.1.1 Quaternaries Analysis ................................................................................ 17

4.1.2 Analysis of Interview .................................................................................. 26

5. SUMMERY, CONCLUSIONS AND RECOMMENDATION ......................................... 27

5.1Summaery of Finding ..................................................................................................... 27
5.2 Conclusions .................................................................................................................. 28
5.3 Recommendation ......................................................................................................... 29
References ........................................................................................................................ 20
Appendices………………………………………………………………………………………………………………………21
 CHAPTER ONE:

1. INTRODUCTION
1.1Background of the Study

Every aspects of management in the modern age rely heavily on information to thrive.
Information is essential for the endurance of a financial organization in the global and
competitive market. The nature of globalization and competitiveness in the market stress
on the importance of developing an organization capability through better enhancing
Information System (IS).

O’Brien and Maracas (2006) noted the bank based information systems can clearly aid
organizations in the processing of data into accurate, well presented, up-to-date and cost
effective information. Currently to succeed in business world; companies require
information systems that can support the diverse information and decision-making needs
of their managers and business professionals.

In this regard the role of Bank based information system is very important since its main
objective is helping decision makers by providing accurate and time based information to
make the right decisions in turbulent environment.

Information System provided through bank is the series of processes and actions involved
in capturing raw data, processing it in to usable information and disseminating it to users
in the form needed (Chris, 1971). Klein (1998) enlightened that information systems
provide decision makers with the means of altering the degree of uncertainty in decision-
making situations. He emphasized on the importance of information in decision making by
suggesting that the key to a good decision is 90% information and 10% inspiration. If the
relevant information required in a decision-making process or an organization planning is
not available at the appropriate time, then there is a good change to be a poor organization
planning, inappropriate decision-making, poor priority of needs, and defective
programming or scheduling of activities (Adebayo, 2007).

Currently the intimidations or threats associated with banking business operation

especially in developing countries like Ethiopia are enormous. Ait (2017) noted in his
article review, banking based related information threats have adversely affects the
quality of bank managers’ decision in the absence of a well-structured managerial
information system and it makes the function of the management to have little impact on
entire organization. This has led to the inefficiency and uncertainty of the information
and communication in organization even through such problems could be turned to
business opportunities. This is the reason why managers monitor and evaluate trends in
their business environment through internal and external channels of information
available and accessible to them by using modern information technology. Therefore,
this research is try to conduct to assess the role of bank based information system
availability and its utilization in commercial bank of Ethiopia with the support of
primary and secondary data collected through questionnaires and interviews and from
related secondary data sources such as annual reports, books, reviewed journals and
articles and various web sites.

The brief history of commercial bank of Ethiopia (CBE) was dated back to the
establishment of the State Bank of Ethiopia in 1942. CBE was legally established as a
share company in 1963 and in 1974 was merged with the privately owned Addis Ababa
Bank. Since then, it has been playing a major role in the development of the country.
Currently this bank has opened more than 1,280 branches stretched across the country.
The bank has also more than 18.8 million account holders and 1.7 million numbers of
Mobile and 36,768 Internet Banking users as of June 30, 2018. Active ATM card
holders of the bank reached 4.4 million. The ATM and POS machines of the bank as of
June 30, 2018 were 1,708 and 11,796 respectively. CBE has strong correspondent
relationship with more than 50 renowned foreign banks and has a SWIFT bilateral
arrangement with more than 700 other banks across the world. It combines a wide
capital base with more than 33,000 talented and committed employees (CBE Company
Profile June, 2018).
1.2Statement of the Problem

To execute planning, organizing, staffing, directing and controlling, the chief has to lay
down policy, communicate, motivate and take either long term or short term decision in
different business transactions. This decision making is better and sound if the
organization is small and everything is under control of the management (Sachem,
2010). However, in real life, situations are complex and uncertain as well as dynamic in
nature. Thus manager has to depend more on scientific decision making rather than on
his own judgment alone.

In a scientific decision making process; decision should be based on data concerning the
past performance viewed in the present situation and projected for emerging future
trends. This type of decision is arrived after collecting, processing, analyzing data and
only then providing information. Hence, bank based information system is the tool,
which helps the management by providing the relevant information in the right form to
the person and at the right time (Sachem, 2010).

By bringing together information from a variety of sources in one database and provide
the information in a logical way, information system through bank can also provide
managers with everything they need to make informed decisions and very in-depth
analysis of operational issues (Minwer, 2016). As a result, bank based information
system can initiate managers to make best decisions by producing sufficient information
timely and accurately to the concerned decision making managers.

This is also evidenced by the organizational structure of the bank which clearly indicates
the existences is help to produce information accurately and timely in order to enhance
managers’ decision making effective. Therefore, the aim of this proposed study is try to
assessing the major role of bank based information system that organized and delivering
accurate and timely to enhance effective managers decision.
1.3 Objective of the Study

1.3.1 General Objective of the study

The general objective of this study is to assess the bank based Information systems in
managerial decision in case of Commercial Bank of Ethiopia in chiro branch.

1.3.2 Specific Objectives of the study

This study attempted to achieve the following specific objectives in commercial bank of
Ethiopia.

 To identify Information Systems availability through commercial bank of Ethiopia

as compared with the financial institution.
 To identify the roles of the bank based information system in to promote
managerial decision.
 To examine the availability and utilization of bank based Information Systems to
enhancing managers’ decision effectively based on time, accuracy, completeness,
relevancy, and reliability criteria.

1.4 Research Questions

The information system provided through the bank is crucial for the managerial decision
making, so this study were attempted to answer the following questions particularly in
the Commercial Bank of Ethiopia.

 What Information Systems are available currently in commercial bank of Ethiopia

as compared with the financial institution?
 What are the roles of the bank based information system in to promote managerial
decision?
 What extent of the availability and utilization of bank based Information Systems
are enhanced managers’ decisions making in commercial bank of Ethiopia?
1.5 Significance of the Study

The findings of this study would have valuable contribution for the management and
stakeholders of the bank as indicated. First, this study clearly shows utilizing effective
information system at all management decision making processes of the bank would
enhance managers’ decision making quality for better achievement of organizational
objectives. Secondly, this study also helps the management as an input to evaluate the
bank’s current practice and identify the gap aligned with IS theory for further
improvements on bank based information system at its most business operational level.
Hence, it supports to escalate their managers’ decision making ability by implementing
or improving the existing bank based information whichever is effective.

1.6 Scope of the Study

Commercial Bank of Ethiopia (CBE) is a huge financial organization; it’s difficult to

conduct this study in all commercial bank of Ethiopia throughout the country, so the
study was limited on managerial decision-making positions within the geographical
location of chiro town only. The major reasons for the scope were limited for this study
to assess role of bank based information system for managerial decision-making only
because:

1.7 Organization of the Study

This study were organized under five chapters. The first Chapter includes background of
the study, statement of the problem, objectives of the study, research questions,
significance of the study, scope of the study and limitation of the study. The Second
chapter is taking in to account the related literature review which includes the
theoretical, empirical, Gap analysis and the conceptual framework of the study. The
third chapter examines the research methods to be used in undertaking the study. The
fourth chapter presents in depth the analysis, presentation, and interpretation of data.
The fifth chapter incorporates the major research findings summary, conclusions,
recommendations and suggestions for further research parts of the study.
CHAPTER TWO RELATED LITERATURE REVIEW

2.1 Theoretical Literature Review

2.1.1 Theoretical Definitions of MIS

The Management Information System (MIS) is a concept of the last decade or two. It
has been understood and described in a number of ways. It is also known as the
Information System, the Information and Decision System, the Computer-Based
Information System (Davis & Geist, 2004). Despite the absence of consensus on a
standard definition of MIS in information systems literature, Davis and Olsen have
suggested a commonly cited definition, according to which MIS is “an integrated, user
machine system providing the necessary information to support core functions of the
firm such as operations, management, and decision making”. These systems typically
utilize computer software and hardware, manual procedures, models for analysis,
planning control, decision making and a database (Panagiotis, 2013).

Bank based information system is also defined by Barton & Parolin (2005) as a system
which provides information support for decision making in the organization. Bendoly
(2008) defined MIS as an integrated system of man and machine for providing the
information to support the operations, the management and the decision making function
in the organization. Bresfelean (2009) was also defined bank based IS as a system based
on the database of the organization evolved for the purpose of providing information to
the people in the organization. Management Information System is an information
system that integrates data from all the departments it serves and provides operations
and management with the information they require. MIS is developed to improve
business system for managers, provide business information including budgetary,
financial and program performance. Therefore, MIS is a multifaceted discipline,
combining technologies, personnel, processes, and organizational mechanisms (Kumar,
2015).

2.1.2 MIS Conceptual Developments

The growth of the Internet, the globalization of trade, and the rise of information
economies have raised the importance of information systems within organizations. It is
imperative that researchers and practitioners recognize how information technologies
shape the business world. The study of management information systems (MIS)
appeared in the 1970s to concentrate on the use of computer-based information systems
in business firms and government agencies (Stephen, 2018).

The information system has shown a lot of developments in the way of its' functioning.
Earlier, information systems function was in the form of record keeping, accounting,
transaction processing and electronic data processing. A new task was conceived in the
form of management information systems (MIS). MIS focused on providing managerial
end users with predefined management reports that would give managers the
information they needed for decision-making purposes. Again it was evident that the
pre-specified information products provided by such information reporting systems were
not adequately meeting many of the decision-making needs of management. So the
concept of Decision Support System (DSS) was born (Stephen, 2018).

The new task for information system was to provide managerial end users with ad-hoc
and interactive support of their decision making processes. This support would be
tailored to the unique decision making styles of managers as they confronted specific
types of problems in the real world. The rapid development of microcomputer
processing power, application software package, and telecommunication networks gave
birth to the phenomenon of end user computing (Stephen, 2018). Now end users can use
their own computing resources to support their job requirements instead of working for
the indirect support of corporate information service departments. Again it became
evident that most of the top corporate executives did not directly use either the reports of
information reporting systems or the analytical modeling capabilities of decision support
systems, so the concept of Executive Information System (EIS) was developed. These
information system attempts to give top executives an easy way to get the critical
information they need, when they want it, tailored to the formats they prefer (Stephen,
2018).

Today, Expert Systems can serve as consultants to users by providing expert advice in
limited subject areas. Finally, an important new role for information system developed
in the form of Strategic Information System (SIS). In this concept, information systems
are expected to play a direct role in achieving the strategic objectives of an organization.
This places a new responsibility on the information systems department of an
organization. All these changes have increased the important of information system for
the success of an organization (Stephen, 2018).

2.1.3 MIS Role in Financial Institutions

There is a significant need for determining the role of management information systems
(MIS) in commercial banks. Information systems have become a vital component of
successful business firms and other organizations. The knowledge of the real role of
MIS in banks would help information system managers in managing information
systems by judging the business needs of the information system projects, associated
risks, importance and ranking of information system managers in organizational
hierarchy, need for innovation and flexibility in MIS planning approach, etc (Kumar,
2015). MIS satisfies the diverse needs through variety of systems such as query system,
analysis system, modeling system and decision support system. Management
information system helps in strategic planning, management control, operational control
and transaction processing. MIS helps the middle management in short term planning,
target setting and controlling the business functions. It is supported by the use of the
management tools of planning and control. MIS helps the top level management in goal
setting, strategic planning and evolving the business plans and their implementation.
MIS plays the role of information generation, communication, problem identification
and helps in the process of decision-making. Therefore, MIS plays a vital role in the
management, administration and operation of an organization (Kumar, 2015).

2.1.4 MIS Time Tested Concepts and Decision Making

Before discussing further on MIS, it is better to glimpse some time-tested concepts

reviewed. Davis offers a commonly used concept in his distinction between data and
information. Davis defines data as raw facts, figures, objects, etc. Information is used to
make decisions. To transform data into information, processing is needed and it must be
done while considering the context of a decision. We are often awash in data but lacking
good information. However, the success achieved in supplying information to decision
makers is highly variable. Barabba expands this concept by also adding inference,
knowledge and wisdom in his modification of Haechel's hierarchy which places wisdom
at the highest level and data at the lowest. As one move up the hierarchy, the value is
increased and volume decreased. Thus, as one acquires knowledge and wisdom the
decision making process is refined. Management information systems attempt to address
all levels of Haechel's hierarchy as well as converting data into information for the
decision maker. As both Barabba and Haechel argue, however, just supplying more data
and information may actually be making the decision making process more difficult.
Emphasis should be placed on increasing the value of information by moving up
Haechel's hierarchy (Panagiotis, 2013).

Another important concept from Davis and Olsen is the value if information. They note
that “in general, the value of information is the value of the change in decision behavior
caused by the information, less the cost of the information.” This statement implies that
information is normally not a free good. Furthermore, if it does not change decisions to
the better, it may have no value. Many assume that investing in a “better” management
information system is a sound economic decision. Since it is possible that the better
system may not change decisions or the cost of implementing the better system is high
to the actual realized benefits, it could be a bad investment. Also, since before the
investment is made, it is hard to predict the benefits and costs of the better system, the
investment should be viewed as one with risk associated with it (Panagiotis, 2013).

MIS is a Computer based Information System. Conceptually, a management information

system can exist without computers, but it is the power of the computer, which makes
MIS feasible. The question is not whether computers should be used in management
information systems, but the extent to which information use should be computerized.
The concept of a user-machine system implies that some tasks are best performed by
humans, while others are best done by machine. Management information systems
typically provide the basis for integration of organizational information processing. The
integration of diverse information system can be achieved through standards, guidelines
and procedures set by MIS function. The trend in information system design is to
establish a database by which data items are integrated across many sections/units of an
organization and made consistently available to a variety of users. It is where the
computer works superior than humans (John & Halldess, 2015).

MIS is an integrated, user-machine system for providing information to support

operations, management and decision making functions in an organization. The system
utilizes computer hardware and software, manual procedures, models for analysis,
planning, control and decision making and a data base (PMU, 1987 and Jayashankar,
1991). Timely access to good information is necessary for well-informed management
decisions. MIS provides managers with timely access to information on resources,
activities and outcomes for planning, directing, controlling and decision making from
different parts of the organization or system. MIS enhances the information processing
of the organization in the following ways: Compact storage of data, Swift
communication, High speed, reliable processing of raw scheme data into, information,
reduced workloads and High quality information support for managerial decision
making (John & Halldess, 2015).

MIS is a formal establishment of information systems accepting data as input for further
processing and provides information as a final output that helps management decision
making process in the organization. MIS is an information system used for supporting
decision making in general on all levels in an organization (Larsson and Malmsjo,
1998). Management information systems is an idea which is associated with man,
machine, marketing and methods for collecting information from the internal and
external source and processing this information for the purpose of facilitating the
process of decision-making of the business. Management information system is also an
integrated set of component or entities that interact to achieve a particular function,
objective or goal. Therefore, it is a computer based system that provides information for
decisions making on planning, organizing and controlling the operation of the sub-
system of the firm and provides a synergistic organization in the process (Kumar, 2015).

Kumar (2015) stated Management Information Services helps manager to access

relevant, accurate, up-to-date information which is the more sure way of making
accurate decisions. The management information services are capable of taking
advantage of the computational ability of the company like processing, storage capacity
among others. Based on this relevancy, management information system should be
installed and upgraded in various organizations since today’s managers need them to
access information for managerial decision making and also management functions. The
actual MIS process relates to: collection, organization, distribution, storage of wide
information, managerial control and analysis of data. Hence MIS focuses on:
organization-wide information, decision-making process, managerial control and
analysis, computer-based system. Therefore, Management Information Systems is sets
of inter-related procedures using information system infrastructure in a business
enterprise to generate and disseminate the desired information. Such systems are
designed to support decision-making by the people associated with the enterprise in the
process of attainment of its objectives.

Uses of management information system can be functional or strategic. Functional uses

of MIS enhance quality of operations and services as a result we achieve efficiency,
transparency and speedy decision making. Strategic uses of MIS precise development of
strategies, planning, forecasting and monitoring, problem solving, decision making,
separate work from location (Sachin, 2010). Businesses are processing information in
order to improve organizational performance and produce profits. From a business
perspective, an information system is an important instrument for creating value for the
organization. There are many ways in which information systems can contribute to firm
value, including increasing the firm’s return on its investments, enhancing the
company’s strategic position, or increasing the market value of the firm’s stock.
Information processing activities support management decision making, enhance the
execution of business processes and as a result increase business value.

Terry (1997) stressed that the need for MIS in decision making as it provides
information that is needed for better decision making on the issues affecting the
organization regarding human and material resources. More recently, Adebayo (2007)
explained that the existence of MIS is needed to improve and enhance decision making
on the issues affecting human and material resources. Therefore, nature of globalization
and competitiveness in the market stress on the importance of developing an
organization capability through better enhancing MIS. Management information systems
give managers quick access to information (Rhodes, 2010). This can include interaction
with other decision support systems, information inquiries, cross-referencing of external
information and potential data mining techniques. These systems can also compare
strategic goals with practical decisions, giving managers a sense of how their decisions
fit organizational strategy. In summary, Rhodes simply believes that management
information systems are a huge contributing factor in the getting of viable information
from organizations.

2.1.5 MIS Role in Decision Making

Number of authors have been discussed the role of information system in decision
making, out of which, Kostetsky was one of the first authors who wrote about the
relationship between information systems, system analyst and decision making in 1966.
MIS provides knowledge about the relative position of the organization and basic forces
at work. It provides the right information needed in decision making process and help
the organizations control, planning and operational functions to be carried out
effectively (Leonard, 2008). Furthermore, Ajayi and Omirin (2007) noted the use of
MIS in decision-making on long-term planning, short-term planning and budgeting in
the SouthWest Nigerian Universities. A stratified random sampling technique was used
to collect data and concluded that there was a significant difference in the use of MIS for
decision making on budgeting between Federal and State universities in favor of the
Federal universities. The authors recommend that the MIS units should be adequately
financed and maintained to ensure a free flow of information and adequate use of MIS in
decision-making on short-term and long-term planning as well as budgeting. Decision
making process and its impact on top level management in a business organization was
also explained with an emphasis on automated study found that the dynamic nature of
MIS makes it difficult for some organizations to keep up with the principles, strategies,
propositions or even ideas (Ghaffarzadeh, 2015)

Decision making is the process by which organizational members choose specific course
of action in response to threats and opportunities (George & Jones, 1996). Good
decision result in courses of actions that help an individual, group or organization to be
effective, the opposite is its reverse. Every organization grows, prospers or fails as a
result of decisions made by its decision makers. Simon (1984) classified decisions into
two broad categories according to the extent that the process of decision-making can be
pre-planned: Programmed Decision: these are decisions made using standard rules,
procedures or quantitative methods. To make a programmed decision, the decision
maker uses a performance program, a standard sequence of behavior that organizational
members follow routinely whenever they encounter a particular type of problem or
opportunity (George and Jones :429). Non-programmed Decisions: this type if decision
deals with unusual or exceptional situations. They are decisions made in response to
novel problems and opportunities. This type of decision is associated with high degree
of uncertainty, cannot be delegated to low levels, may involve things, but always
involves people. Examples: merger, acquisitions, launching of new product, personnel
appointments, etcetera (Lucey, 2005).

Development of information and communication technologies as change structures of

societies, it also affected task of manager’s making decision. Many organizations
prepare them self for effective and efficient use of new information and communications
technologies. Information and communication technology has two benefits for
organization. First, it enables organizations and managers to easily acquire data. This
will cause further support the decision making process.

Second, the use of information and communication technology enables organizations to

have better operate in a global competitive environment and make effective decision
making. Information and communication technology improve the quality of decision
making that is crucial factor for organization. The information and communication
technology has become an essential component in the process of decision making in
organization and managers at all levels increasingly get help from information and
communication technologies (Feizi & Moghadassi, 2012). Information and
communication technology enables collect, analyze and evaluate data and transferring
them from one point to another and cause instant access to information, Reduce costs,
Produce better, Carefully, Coordination, Leading time, improved control and will lead to
better services. Decision making is an integral component of management. The
management is so smart in determining organization's policies and developing
objectives. Organization design, Choice, Assessment and management practices in all
forms, Decision-making are one of the main fundamental pillars. In a simple definition,
decision making is choose a way between different paths (Alvani, 2012).

2.1.6 Thought on Related Theories or Models

Models of Decision Making-The Rational Model: The rational manager view assumes a
rational and completely informed decision-maker (economic man) as described by
neoclassical microeconomic theory around the middle of the previous century. The
process of rational decision-making comprises a number of steps, such as those given by
Simon (1977): Intelligence: finding occasions for making a decision; Design:
inventing, developing and analyzing possible courses of action; Choice: selecting a
particular course of action from those available; and Review: assessing past choices.
In classical or perfect rationality, methods of decision analysis are used to attach
numerical values or utilities to each of the alternatives during the choice phase. The
alternative with the highest utility (or maximum subjective expected utility) is selected.
When using the rational model in this fashion, it is assumed that managers know the
consequences of implementing each alternative; have a well organized set of preferences
for these consequences; and have the computational ability to compare consequences
and to determine which is preferred (SM Turpin & MA Marais, 2004).

The Theory of Technology Acceptance Model (TAM): TAM was proposed by Fred
Davis (1989) and widely developed in following years. This theory aims to evaluate how
the acceptance of a technology influences the use of the technology itself. This theory
find its foundation on the idea that perceived ease of use and perceived usefulness
finally determine the attitude towards the technology and its actual use. Davis (1989)
defines Perceived Usefulness (PU) as the extend people believe an application will help
them to perform their job better and the Perceived Ease of Use (PEOU) as the degree to
which a person believes that using a particular system would be free of effort. According
to Davis (1986, 1989), Perceived Usefulness and Perceived Ease of Use are
determinants of Attitude towards Use, Behavioral Intention to Use, and Actual Use of an
Information System (Alberto & Gianluca, 2018).

2.2 Empirical Literature Review

Management Information Systems related studies were conducted by different

researchers in different parts of the world especially on Jordan private and foreign
banks, Saudi Arab banks, India Banks, South Africa and Nigeria banks. However, I have
found only a single study related to MIS utilization in commercial banking in Ethiopia
which was conducted by Samuel (2013) with a research topic called “Management
Information Systems Availability and Utilization as Factors Influencing Managers in
Decision-Making: The Case of Commercial Banks in Ethiopia”. Actually a number of
studies were available related to E-Banking services in Ethiopia. For example,
Gardachew (2010) conducted research on the opportunities and challenges of E-Banking
in Ethiopia and many others have been conducted their research topics related to internet
banking, mobile banking and E-Banking.
2.2.1 Empirical Studies on External Banks

The study Al Meetany (2004) noted “The impact of the management information system
to improve the efficiency and effectiveness of the Jordanian Commercial Banks: A Case
Study of Arab Bank”. This study aimed to identify the impact of management
information system to improve the efficiency and effectiveness of Arab Bank from the
perspective of both the staff and the Arab Bank management and dealing with
customers. Among the most important findings of the study, users of management
information systems have level technicians and highly skilled. Qualifications and
experience enable them to perform their work to the fullest and an appropriate degree of
information provided by the systems and used very high. Thus, on the effectiveness of
decision making that are meant to take, Arab Bank has efficiently providing hardware
and software required for operation of the system, as evidenced by the study on the
existence of a positive relationship between the linear size of investment in management
information systems and the bank's profits greater the volume of investment in
management information systems increased the bank's profits (Shehadeh & Nazem,
2013).

Al-Saudi Study: The study aimed to identify the effect of Computerized Information
Systems in the performance of employees. The study reached the following results: The
respondents' perceptions about the requirements of operation of information systems
were high, and their perception towards job performance was moderate and the main
requirements for managing the operation of computerized information system are:
(physical, software, human and organizational) have an impact in job performance.

2.2.2 Empirical Evidence on Banks in Ethiopia

A study was conducted by Samuel (2013) on “Management Information Systems

Availability and Utilization as Factors Influencing Managers in Decision-Making: a
Case of Commercial Banks in Ethiopia” was also taken as empirical evidence in this
research study. The intent of such study was to check an extent of MIS availability in
order to modifying management decision making in government and Private commercial
banks in Ethiopia. Also Samuel was intended to see the availability of MIS for
managers’ decision-making and examined how utilization of management information
systems’ influence decision making in commercial banks in Ethiopia.
 CHAPTER THREE

3. RESEARCH METHODOLOGY

3.0 Introduction

This chapter presents the research design and methodological framework applied to
solve the research problem and to answer the research questions. It starts with
introduction part and goes through research design, data sources, instruments for data
collections and document analysis and end with data analysis and interpretation part.

3.1 Background of the study area

Oromia is one of the nine regions in Ethiopia which constitute about 35% of total
population and 40% of urban population of the country. Chiro is among many Oromia
regional state towns which is located at about 312km south east of Addis Ababa along
the main road from Addis to Harar and Dire Dawa. The total area of the town is 32 km 2
and topographically it is plain. The town was established in 1915 during emperor
regime. Currently according to Oromia proclamation Number 65/2003 urban grading, it
is recognized as reformed city and found at 2nd rank (Megeleta Oromia, 2003). The
town has both municipal and state function. It is the capital of western Hararghe zone.
According to CSA (2014) projection the current total population is 83,643 of which
male constitute 48,092 and female 45,551, among these, economically active population
estimated around 70%. In General, the town characterized by weak governance, poor
social service delivery and infrastructure provisions, high unemployment, and
mismatch between population growth and economic development. (Chiro Town Local
Government, 2012)

A. Economic activities.
In Chiro the major economic activities are mainly tertiary such as trade and shopping
goods which are displayed at market, hotel, restaurant and bar; selling and buying
agricultural products, retail trade of consumable goods like Chat and coffee and products
of small scale industry like wood and metal works.

B, Social services
Education: In the town currently, there are 10 elementary schools, 2 high school, and
one preparatory school, two Universities, one technical and vocational training college
and. The educational coverage of the town is 77.8%. The approximate primary school
converge of the town, is about 94.3% (Chiro Town Local Government, 2012).

Health: Concerning health situation of the town, there are 8 private clinics, 15
pharmacies that are owned privately, one family Health Guidance clinic and one health
post, and one hospital. The total health coverage of the town is 81%. This increment is
from 69% in 2004/05 to 81%in 2007/08.

The child and maternal death decrease as infant mortality are given due attention by the
city administration, even if there is no data at a time.

3.2 Research Design

A research design is refers to the overall strategy that you choose to integrate the
different components of the study in a coherent and logical way, thereby, ensuring you
effectively address the research problem (Kothari, 2004). Descriptive research is a type
of research that is mainly concerned with describing the nature or condition and the
degree in detail of the present situation (Creswell, 2003). Koul (2008) was also affirmed
that descriptive survey design becomes useful particularly where one needs to
understand some particular information. Hence, this study focuses on describing the
current situation of the problem and answers the research questions; a descriptive survey
method is used to show how the management information systems availability and
utilization enhanced managers’ decision making process in commercial bank of
Ethiopia. Further, a descriptive research method is preferred for this study on the
assumption that it is helpful to gather enough information from many people on the
issues under study.

3.3 Data Sources

In this study, primary and secondary data sources were used to collect adequate
information. The primary data sources was collected through questioners and interviews
using simple random and purposive sampling techniques from managers working in
commercial bank of Ethiopia in chiro branch. Secondary data sources such as
management information system related books and review articles conducted
internationally, journals, annual reports of the bank and different internet web sites are
used by large as references to avoid the inadequacies of information.

3.4 Instruments for Data Collections

Questionnaires, interview, and document analysis were used as most important data
gathering tools to acquire adequate data. Therefore, employing multiple data collection
instruments helps the researcher to combine, strengthen and amend some of the
inadequacies of the data and for triangulating it (Cress well, 2003).

3.5 Total Population and Sample Size

The target population of the study were be the total employees of commercial bank of
Ethiopia Chiro town main branch, so the researcher selected 25 employees of CBE
Chiro main branch including its managers of the bank as a sample size by using both
simple random sampling technique to determine the sample size for questionnaires and
purposive sample technique to conducting this proposed study.

3.6 Sampling Technique

Leedy and Ormrod (2005) state that in simple random sampling technique each member
of the population has an equal chance of being selected. Whereas, in a purposive
sampling technique, selection is based on characteristics of a population and the
objective of the study. This type of sampling can be very useful in situations when you
need to reach a targeted sample quickly, and where sampling for proportionality is not
the main concern. Therefore, this study applies both simple random sampling technique
to determine the sample size for questionnaires and purposive sample technique for the
interview part.

3.7 Data Analysis and Interpretations

Descriptive and inferential statistical analysis techniques such as Frequency, Percentage,

Mean and standard deviation, minimum and maximum values were used to describe
variables in this proposed study.
 CHAPTER FOUR

4. DATA PRESENTATION AND ANALYSIS

4.1 Introduction
Data analysis and interpretation is also included in this chapter. The analysis based on
data collected from documents of CBE and from primary data collected by
questionnaires and by holding interviews with staff at various management levels whose
day to day activates mainly concerned with accounting information system and uses it
directly in the management activity so that conclusion could be drawn based on the
findings.
Questionnaires were distributed to 25 employees of CBE who have direct work
relationship with management completed and submitted the questionnaires. Thus, the
methods used to collect the data have enabled to get reliable information about the
research.
4.1.1 Quaternaries Analysis
Table 1: Background information of the respondents
1.Educational background Response Respondent
No %
Diploma 3 12
BA Degree 17 68
Above BA Degree 5 20
Total 25 100
2. How long have you been Service year No %
1-2 Year 10 40
Commercial bank of Ethiopia?
3 Years and above 15 60
Total 25 100

3.Current position Sub- Process No %

CATS 4 16
TS 4 16
Credit Process 4 16
No %
Position
Manager 1 4
CSM 3 12
CSO 3 12
Department No %
IT 3 12
 MIS 3 12
Total 25 100
Source, primary data, 2014

The educational background distributions of the respondents show that most of them
have educational qualification of BA degree and some of them are above degree holders
and diploma.
The sub-process shared by respondents constitutes 16% of CATS, 16% of TS, 16% of
credit process and 8% of MIS. From position 4% of manager, 12% of CSM and 12% of
CSO. In the department respondents constitute 12% of IT department. This has an
advantage to the research in that it is mainly sub-process who involved in the use of
information system in the routine activity of CBE. As far as the distribution of service
year of the respondents is concerned, most of the respondents stayed in the organization
for 3 years and above and a little less of that also stayed for 1-2 years
Table 2: Respondents answer the question Accounting Information
System problem existed in commercial bank of Ethiopia
Q4. Is there Information System problem Response Respondent
existed in commercial bank of No %
Yes 6 24%
Ethiopia?
No 16 64%
Don’t Know 3 12%
Total 25 100%
Source, primary data, 2020
The majority of the respondent does not agree in the information system problem existed
in CBE and 24% of respondent agree in the IS problem existed in CBE.
It shows that some of the respondents believe that there is IS problem existed in CBE,
while most of them agree that there no IS problem In CBE. So we can say that currently
CBE implementing its information system with a little problem.
Table 3: Respondent’s attitude towards the awareness of CBE management about
the use and implementation of information system
Q5. How is the awareness of CBE Response Respondent
management about the use and No %
implementation of accounting information Very Strong 11 44%
Strong 8 32%
system? Medium 5 20%
Low 1 4%
No opinion 0 0$
Total 25 100%
Source, primary data, 2020

44% of respondents very strongly agree about awareness in AIS usage and
implementation. 32%of them strongly aware AIS in usage and implementation and the
rest 20% of them have medium awareness of AIS in usage and implementation on the
awareness 4% of them have low aware implementation AIS usage and This might be
result from the awareness of the respondent is high on the implementation of AIS.

Table 4: Respondents’ attitude towards the use of AIS for administrative decisions

Q6. Do you believe that accounting Response Respondent

information system is used by CBE No %
Strong Agree 12 48%
effectively for administrative decisions? Agree 10 40%
Disagree 0 0%
Strongly disagree 0 0%
I don’t know 3 12%
Total 25 100%
Q7. How helpful has Very much Helpful 20 80%
AIS to your business in Helpful 5 20%
administrative Not helpful 0 0%
decision?
No opinion 0 0%
Total 25 100%
Source, primary data, 2014

As it can be seen from the table, 48% of the respondents strongly agree on the use of
AIS for effective administrative decisions and 40% of them simply agree. When we
come to the extent of helpfulness 80% of the respondents replied that AIS is very much
helpful for administrative decisions and operational decision to their business and the
rest 20% of them agree on the helpfulness slightly. So this shows that AIS has great role
in administrative decisions.

Table 5: Respondents opinion about the effect of AIS on the quality of decisions of
their organization

Q8. In your opinion, how do you evaluate Response Respondent

the effect of accounting information No %
Increases the Quality 22 88%
system on the quality of decision of your 0 0%
Decreases the quality
organization? No change in its 3 12%
quality
Not Sure 0 0%
Total 25 100%
Source, primary data, 2020

The majority of the respondents, to the extent of 88% confirmed that AIS increased the
quality of decision and 12% of the respondents replied that no change in its quality. This
indicates that AIS has big role increasing the quality of decision. But it differs in its
performance of AIS; if there is good AIS system there is good quality of decision and
vice versa.

Table 6: Respondents answer for question regarding the contribution of AIS for
the attainment of their organization objectives.

Q9: Does accounting information system Response Respondent

contribute for the attainment of your No %
Yes 25 100%
organization objectives? No 0 0%
I Don’t Know 0 0%
Total 25 100%
Source, primary data, 2020

All of the respondents confirm that the contribution of AIS for attainment of
organization objectives. Therefore we may say, AIS is one of essential component of
organizations in order to achieve organizational objectives.

Table 7: Respondents attitude towards the role of AIS in CBE administration

Q10. What is the role of Response Respondent

accounting information system in No %
Improved decision making 1 4%
CBE administration?
Improved management 1 4%
reporting
In sharing of knowledge 1 4%
Improved transactions 1 4%
processing

Improved decision making 1 4%

and efficiency
 Improved decision 2 8%
making, management
reporting and
transactions processing
All above 18 72%
Total 25 100%
Source, primary data, 2020

As the table depicts, 72% of the respondents said that the role of AIS in the CBE
administration is in all aspect such as in decision making, management reporting,
sharing knowledge, efficiency and transaction processing. So that we can perceive from
this, AIS have a big role in administration of one organization.

Table 8: Respondents attitude towards the existence of knowledge gap between

different levels of management is CBE.

Q11. Does knowledge gap exist between Response Respondent

different levels of management is CBE? No %
Yes 13 52%
No 4 16%
I Don’t Know 8 32%
Total 25 100%
Source, primary data, 2020

The majority of the respondents confirm that there is knowledge gap between different
levels of management and 16% of the respondents do not agree in the existence.
Therefore it a shows a knowledge gap existence between different levels of management
of the organization.

Table 9: Respondent’s attitude towards the standard services provided by AIS and
its contribution in the administration

Q12. How do you rate the standard Response Respondent

services provided by AIS over the past No %
Have improved 12 48%
years?
Have improved a 8 32%
little
Have deteriorated 2 8%
Have not changed 0 0%
Do not know 3 12%
 Total 25 100%
Source, primary data, 2020

48% of the respondents know the standard services provided by accounting information
system have shown improvement and 32% of the respondents understand that the
contribution made by AIS over the last years have little improved. From the above table
9 the roles of AIS in providing the standard services are showing improvement from
time to time. As assistance of AIS in decision making is now widely spread, it also helps
the management of CBE in order to increase income, efficiency effectiveness and
enabling frequent data processing for its decision making strategy.

Table 10: Respondents answer for questions regarding strategic positions and AIS
helpfulness in achieving this position

What strategy positions is CBE Bank Response Respondent

Pursuing? No %
Varity based 17 68
A need based 8 32
An access based 0 0
Total 25 100
Q14. How helpful has accounting information Very much helpful 18 72
system to achieve this position? Helpful 4 16
Not helpful 0 0

No opinion 3 12
Total 25 100

Source, primary data, 2020

From the above table10, 68% of the respondents said that the organizations management
is pursuing a variety based strategic position and 32% answered that the management of
CBE is following a need based. As it can be observed the majority of the respondents
replied the management of CBE is pursuing a variety based strategic position. A variety
based strategic position involves producing subsets of the industry’s products or
services. Here it should be beard in mind that

CBE is offering multi-channel banking that is, providing via an ATM,(Automated teller
machine) From the second question table -10, above 72% of the respondents replied that
the AIS play an essential role in helping for achievement of the strategic position. So
that AIS is crucial for the achievement of strategic position of an organization.

4.1.2 Analysis of Interview

In order to aid the research, the information was gathered by the way of interview from
CBE staff. The following conclusions are essential points that gathered through the
interview

1. The Component parts of CBE AIS. The main component parts of CBE AIS is
flexible software under this software we can find CSO( where cheeks and
deposits are withdrawn) accounts report, accounts checking and accounts audit.
There are benefits of flexible software such as:
 Sustain growth and ensure continuous improvement
 Achieve a rapid return on investment, usability and ownership
 Reduce the cost and time of implementation with reusable
methodologies, standards, and best practices
2. The main inputs of AIS CBE is transactions such as: Foreign transactions, ATM
transactions, purchase, Deposit, withdrawals, Salary payment, Maintenance,
Closing entry
3. Working integrated using AIS. In the CBE all related departments work
integrated using one IT server which every organization information settled and
also all departments are networked with IT, so the possibility for
misunderstanding is less.
 CHAPTER FIVE

5. SUMMARY, CONCLUSION AND RECOMMENDATION

From the research finding carried and from the respondents answer and data analyses
from chapter three the following summary of finding, conclusions and recommendation
are forwarded by taking the objective of the research under consideration.

5.1 Summary of Finding

Based on the analysis and discussion made in chapter three the following summary can
be drawn;

 Most of the respondents agree that there is a little AIS problem existed in CBE.
 Above 72% of respondents towards use and implementation of AIS in CBE is
high.
 88% of the respondent believes that AIS used by CBE is effectively utilized for
administrative decisions.
 Most of the respondents are aware of AIS have a power to enhance quality
decisions making to management of CBE.
 Regarding the contribution of AIS to the attainment of organizational goals and
objectives the answer of all the respondents is unanimous.
 72% of the respondents said that the role of AIS in the CBE administration is in
all aspect such as in decision making, management reporting, sharing
knowledge, efficiency and transaction processing.
  Only 15% of the respondent do not agrees the existence of knowledge gap
 For the standard service provided by AIS and its role in the administration on
previous years, 50% of the respondents agree that it has improved over the past
years.
 Majority of respondents replied that AIS is helpful for securing variety based
strategic positions in CBE. .
 Majority of the respondents agreed there is no AIS problem in implementation.

5.2 Conclusions

 AIS have one of essential component of organization in order to achieve

organizational objective, in our case commercial bank of Ethiopia use AIS
effectively to meet its objectives.
 In our case, there is knowledge gap on the use of AIS between different levels of
management.
 The quality of decision in organizations is highly affected by AIS which in turn
affect the administration. In our case, AIS increased the quality of decision.
 Regarding the roles of accounting information system in providing the standard
serves are showing improvement from time to time.
 AIS have great role in administration decision. In our case, AIS is helpful for
administrative and operational decision.
 Regarding to accounting information system problem existed in commercial
bank of Ethiopia. In our case there is problem existed by misunderstanding about
the system.
 Accounting information system is crucial for the achievement of strategic
position of an organization.
 About Commercial bank of Ethiopia profit is increase, this probably results from
effective administration decision.

5.2 Recommendations
Based on the findings, in order to avoid or possibly reduce the problem existing in
accounting information system and its impact on administration some recommendation
can be suggested like;

 CBE should check the information disperse in the company in order to minimize
the knowledge gap.
 To increase the awareness of the management about AIS, CBE should provide
training and technical support.
 In order to provide good quality of decision CBE should increase the
performance of AIS. For example by introducing latest AIS software.
 CBE should update and revise its AIS in order to be competitive in the sector.

References
 Chenhall, R.H. 2003. Management Control Systems (4th edition).
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technology and information processing in small Canadian firms” Journal of
Administrative Science.
 (AIS) on performance measures: empirical evidence SMEs”.The International
Journal of Digital Accounting Research.
 Spanish Fess and Niswonger, (2010). Management Control Systems. Ptice
Jacob publishing house Pvt.Ltd. New Delhi, India.
 GeLinas, Jr, (2008) Accounting Information System. (2th edition), Practice Hall,
Inc, upper saddle river. New Jersey
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edition). New Delhi, India.
 Kabi, A.S (2004).The Role of the Accounting Information in Improving the
Administrative Performance in the Commercial Banks in UAE. Yarmouk
University, Irbid, Jordan.
 Okoli MargaretNnenac. (2012). the use of AIS as an aid to Management.
(7thedition).New Delhi:pvt.Ltd.
 Osmond Vitez,(2010).Accounting Organizations and Society.(7th Edition).
Thomson South-Western, ICC Macmillan, Inc.
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software,Industrial Management & Data Systems. Yarmouk University, Jordan.
 Ugboma, E.(2004).Essential Guidelines for Information Systems Databases
Proceeding (6th edition).New Jersey,U.S.A.
 Vende Ven A.H.; Drazin, R. (1985). The Concept of fit in Contingency theory
Resources.
 Wadia, Manecki S. (1966). The Nature and Scope of Management (2nd
edition).North Aritona university.
 Wilkinson,J.W.(1993).Accounting Information Systems(2nd edition). John
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 http://www.ucop.edu. Accessed on 6/2/2014
 APPENDIX
ODA BULTUM UNIVERSITY
COLLEGE OF BUSINESS AND ECONOMICS
DEPARTMENT OF ACCOUNTING AND FINANCE
Questionnaires
Dear respondents
The one who provided you this questionnaire are the Oda Bultum university student who
is conducting a research on the title ‘A Role of Bank Based Information System in
Managerial Decision (A Case Study on Commercial Bank of Ethiopia Chiro Branch).’

I would like to express my sincere appreciation and deepest thanks in advance for your
precious time and prompt responded.

The purpose of the study in general and the questionnaire particular is to assess Role of
Bank Based Information System in Managerial Decision A Case Study on Commercial
Bank of Ethiopia Chiro Branch So, for the researcher this study is conducted for the
partial fulfilment of the requirement for bachelor of Art in accounting BA degree.
Your valuable support in responding to the questions vital to the success of study, I want
to assure you that this research finding is only for academic purpose, thus your ideas and
comment are highly honoured and kept confidential.
Notice
 No need to write your name.
 Please put a “√” mark in the boxes for your answers
Questionnaire
1. Educational backgrounds
Diploma BA degree MA degree Other, please
specify
2. How long have you been Commercial Bank of Ethiopia?
1-2 years 3 years and above
3. Current positions……………………………………..
5. How is the awareness of Commercial Bank of Ethiopia management about the use
and implementation of bank based information system for managerial decision?
Very strong Low
Strong No opinion
Medium
6. Do you believe that bank based information system is used by Commercial Bank of
Ethiopia effectively for administrative decisions?
Strongly agree Disagree Don’t know
Agree Strongly disagree
7. How helpful has accounting information system to your departments in administrative
decisions?
Very much helpful not helpful
Helpful No opinion
8. In your opinion, how do you evaluate the rolet of bank based Information System on
the quality of decision of your organization?
Increased the quality Decreased the quality
Not change its quality Not sure
9. Dose bank based information systems contribute for the attainment of your
organization objectives?
Yes No don’t know
10. What is the role of accounting information system in Commercial Bank of Ethiopia
administration?
Improved decision making improved transaction Processing
improved efficiency In sharing of knowledge
Improved management reporting In all the above
Other, please specify
11. Dose knowledge gap exist between deferent levels of management in Commercial
Bank of Ethiopia?
Yes No don’t know
12. How do you rate the standard service provided by accounting information system
over the past years in managerial decision?
Have improved Have improved a little
Have not changed Have deteriorated
Do not know
13. What strategic position in Commercial Bank of Ethiopia pursuing?
A variety based A need based
An access based
14. How helpful has Accounting Information System to achieve this position?
Very much helpful helpful
Not helpful no opinion
15. If there is a problem, what is accounting information system problems existed in
Commercial Bank of Ethiopia?
Delay in process Delay in communication
Misunderstanding Data redundancy
Inconsistency other, please specify
16. is there any problem existed in implementing accounting information system in
Commercial Bank of Ethiopia?
Yes No I don’t know
17. If you have any other comment…………………………………
 Interview
1. What are the component parts of CBE Accounting Information system?
2. Did Accounting information system help strength your business skills in the last
years? Yes/NO
3. Are all related department of the organization work integrated using Accounting
Information System?
4. What benefit you get from the use of AIS? In case of record keeping, decision
making and performance evaluation etc?
5. Has AIS been a source of conflict during the last years? Yes/NO if yes explain.
6. Did AIS help your organization in achieving its goals? Yes/No
7. Did AIS help your organization for administrative decision? Yes/No if yes in
what way
8. Has AIS been a source of new anxieties during the last years? Yes/No
9. Does in general AIS have effect or impact on the management or administration
of your organization? If yes, please describe