Automated Systems and Cost Management in Selected Commercial Banks in Bosaso, Puntland, Somalia

ABSTRACT .The study investigated the effect of automated systems on the cost management processes of commercial banks in Bosaso, Somalia. There were three objectives that guided the study. The first objective required the establishment of the effect of transaction processing systems on cost management. The second objective required the determination of the effect of management information systems of cost management. The third objective concerned the effect of decision support systems on cost management. The researcher adopted a cross-sectional study design which involves both quantitative and qualitative approaches. Using this method, the researcher used a structured questionnaire (close ended). A research population of 137 was identified and a sample size of 102 respondents was arrived at by use of Slovene’s formula. In selecting the respondents the researcher used simple random sampling together with purposive sampling techniques. It was found that transaction processing systems had a positive effect on cost management rated at an R square of 0.255. Secondly, it was established that management information systems had a positive effect in the cost management of the banks with the R square being 0.236. Finally, decision support systems were found to be significantly influential in the cost management of commercial banks of Bosaso, Somalia and rated at 0.293 R square. It was also determined that the overall effect that automated systems had on cost management was rated at an R Squared of 0.725.The researcher concluded that the transaction processing systems have a significant impact cost management in commercial banks of Bosaso, Somalia. Management information systems have a significant effect on the cost management of commercial banks in Bosaso, Somalia. Decision support systems help in ensuring that the banks remain cost effective. Decision support systems were found to be underutilized. The researcher recommends that there is need for improving the state of transaction processing systems and their usages to enable effective operations. The information management system needs improvement through appropriate computerization. The decision support systems are vital that cost monitoring be done by the management through the decision support tools for the banks.

TABLE OF CONTENTS

DECLARATION I

APPROVAL II

DEDICATION III

ACKNOWLEDGEMENTS IV

TABLE OF CONTENTS V

LIST OF TABLES VIII

LIST OF FIGURES IX

LIST OF EQUATIONS X

LIST OF ACRONYMS XI

ABSTRACT XII

CHAPTER ONE INTRODUCTION 1

1.0 INTRODUCTION 1

1.1 BACKGROUND OF THE STUDY 1

1.1.1 HISTORICAL PERSPECTIVE 1

1.1.2 THEORETICAL PERSPECTIVE 4

1.1.3 CONCEPTUAL PERSPECTIVE 5

1.1.4 CONTEXTUAL PERSPECTIVE 5

1.2 STATEMENTOFTHE PROBLEM 6

1.3 PURPOSE OFTHE STUDY 6

1.4 OBJECTIVES OFTHE STUDY 6

1.5 HYPOTHESES 7

1.6 SCOPE OFTHE STUDY 7

1.6.1 GEOGRAPHICAL SCOPE 7

1.6.2 CONTENT SCOPE 7

1.6.3 TIME SCOPE 8

1.6.4 THEORETICAL SCOPE 8

1.7 SIGNIFICANCE OF THE SCOPE 8

1.8 OPERATIONAL DEFINITION OF KEY TERMS 8

CHAPTER TWO LITERATURE REVIEW 10

2.0 INTRODUCTION 10

2.1 THEORETICAL REVIEW 10

2.2 CONCEPTUAL FRAMEWORK 12

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2.3.2 MISANDCOSTMANAGEMENT .14

2.3.3 DECISION SUPPORT SYSTEMS AND COST MANAGEMENT 16

2.4 AUTOMATED SYSTEMS AND COST MANAGEMENT 18

2.5 RESEARCH GAPS 21

CHAPTER THREE RESEARCH METHODOLOGY 22

3.0 INTRODUCTION 22

3.1 RESEARCH DESIGN 22

3.2 STUDY POPULATION 22

3.3 SAMPLE SIZE 23

3.4 SAMPLINGTECHNIQUE 24

3.5 RESEARCH INSTRUMENTS 25

3.5.1 QUESTIONNAIRES 25

3.5.2 INTERVIEWS 25

3.6 VALIDITY AND RELIABILITY OF RESEARCH INSTRUMENTS 26

3.6.1 VALIDITY 26

3.7. RELIABILITY 26

3.7.1 DATA GATHERING PROCEDURES 27

3.7.2 BEFORE THE ADMINISTRATION OF THE QUESTIONNAIRES 27

3.7.3 DURING THE ADMINISTRATION OF THE QUESTIONNAIRES 28

3.7.4 AFTER THE ADMINISTRATION OF THE QUESTIONNAIRES 28

3.8 DATA ANALYSIS 28

3.9 ETHICAL CONSIDERATIONS 29

3.10 LIMITATIONS OF THE STUDY 30

CHAPTER FOUR FINDINGS PRESENTATION AND ANALYSIS 31

4.0 INTRODUCTION 31

4.1 DEHOGRAPHICS CHARACTERISTICS OF RESPONDENTS 31

4.1.1 GENDER OF RESPONDENTS 32

4.1.2 AGE DISTRIBUTION OF RESPONDENTS 32

4.1.3 EDUCATIONAL QUALIFICATION OF RESPONDENTS 32

4.1.4 WORK EXPERIENCE OF RESPONDENTS 33

4.2 THE EFFECF OF TRANSACO0N PROCESSING SYSTEMS ON COST MANAGEMENT 33

4.2.1 DESCRIPTIvE STATISTICS ON TRANSA000N PROCESSING SYSTEMS 33

4.2.2 LEVEL OF COST MANAGEMENT IN THE BANKS 36

4.2.3 REGRESSION TEST RESULTS (TPS ON COST MANAGEMENT) 38

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4.3 THE EFFECr OF MANAGEMENT INFORMATION SYSTEMS ON COST MANAGEMENT 39

4.3.1 DESCRWOvE STAIIS1-IcS ON MANAGEMENT INFORMATION SYSTEMS 39

4.3.2 REGRESSION TEST RESULTS (MIS ON COST MANAGEMENT) 42

4,4 THE EFFECT ON DECISION SUPPORT SYSTEMS ON COST MANAGEMENT 43

4.4.1 DESCRIPTIVE STATISTICS ON DECISION SUPPORT SYSTEMS 43

4.4.2 REGRESSION TEST RESULTS (DSS ON COST MANAGEMENT) 45

4.5 THE EFFECT OF AUTOMATED SYSTEMS ON COST MANAGEMENT 47

4.6 SUMMARY OF FINDINGS 49

CHAPTER FIVE DISCUSSION OF FINDINGS,CONCLUSIONS, 4t’D RECOMMENDATION 50

5.0 INTRODUCTiON 50

5.1 DISCUSSION OF FINDINGS 50

5.1.1 THE EFFECT OF TPS ON COST MANAGEMENT 50

5.1.2 THE EFFECT OF MIS ON COST MANAGEMENT 51

5.1.3 THE EFFECT OF DSS ON COST MANAGEMENT 52

5.2 CONCLUSION 53

5.3 RECOMMENDATIONS 54

5.4 N~w INFORMATION GENERATED 55

5.5 AREAS FOR FURTHER RESEARCH 56

REFERENCES 57

APPENDICES 61

APPENDIX I: INFORMED CONSENT 61

Sect/on A: ProfYe of Respondents 62

5ecti~n B: Questionnaire to Determine Automated Systen7s 62

Secti/n C’ Questionnaire to Determine Cost Management Th Banks 65

APPENDIX III: INTERVIEW GUIDE 67