The Impact of Budgeting As a Control Mechanism in Banking Industry: A Case Study of a Nigerian Bank

Abstract

The bank industry in Nigeria has been facing an increasing hostile environment of the business compare to other sectors of industry and what led to these problem are their inability to meet up the proposed budget poor forecasting of future events like inflation and poor control of reported variants. Thus, this work tends to investigate how a Nigerian bank prepares and executes its budget and also how the impact and variances are reported for control purpose. A total of 46 respondents were selected using simple random sampling from the staffs of different branches of a Nigerian bank. Semi structured questionnaires were administered and analysed. Data were presented in form of tables. Two hypotheses were tested for using chi square analysis. This study reveals that budget preparation was carried out in the branches of the bank and that managers are the personnel responsible for the preparation and implementation of budget. It also revealed that the bank has a budget committee and that on the average budgets are actualized. Budget failure according to respondents was caused by poor implementation and forecasting. There was a significant relationship between budget and control mechanism in the banking industry and there was also a significant relationship between budget preparation and budget implementation in the banking industry. This study thus shows that budgeting has a great impact on the control mechanisms in banking industry.