The Effect of Financial Control System on Performance of Banks in Rwanda

Abstract

This study investigated the effect of the financial control system on the performance of commercial banks in Rwanda. A survey using a questionnaire was conducted on two hundred and forty (240) employees drawn from fourteen commercial Banks. The focus was on employees from departments that deal with financial control systems within the banking sectors visa vis Corporate Business Banking, Retail Business Banking, Financial Control, Internal Audit, Operations, and Credit Risk. Descriptive and correlation statistics were computed from the data obtained. The findings of the study indicated that the role of Finance Control teams in Formulation and Management of the Bank Performance Standards had a mean ( =2.69), and a standard deviation of (S=0.32), Management of flows of Resources has got a mean ( =2.93), and a standard deviation of (S=0.23); while the Prevention and management of operational Risk gets a mean ( =3.45), and a standard deviation of (S=0.31). Further Statistical evidence depict that there is a significant relationship between, Formulation and Management of the Bank Performance Standards p=.150 and sig =0.021 (sig<0.05), Management of flows of Resources p=.217 and sig =0.001 (sig<0.05), the Prevention and management of operational Risk p=.061 and sig =0.768 (sig>0.05). ; It was concluded that banks that carry out Financial Control activities on a regular basis have got a good performance, considering the financial control as an integral part of the management functions it influences the performance of commercial Banks. In line with findings it is recommended that banks adopt elaborate financial control systems in tandem with central bank regulations to effectively improve on the sectors performance and overall economy of Rwanda.