THE IMPACT OF INTERNAL CONTROL ON THE OPERATIONAL PERFORMANCE OF SELECTED PRIVATE COMMERCIAL BANKS IN ETHIOPIA

Abstract

This study aimed at examining the impact of internal control on the operational performance of selected private commercial banks in Ethiopia. The selected commercial banks were Cooperative Bank of Oromiya, Anbessa Internatiol Bank, Berhan Bank, Abay Bank and Debub Global Bank. The study sought to find the impact of COSO’s integrated internal control components (control environment, risk assessment, control activities, information and communication, and monitoring) on operational performance. The target population was the internal audit and finance department employees of the selected private commercial banks. A stratified random sampling technique was applied to get data from employees through questionnaire. The study found out that the selected private commercial banks have effective control environment, effective risk assessment, effective control activities, effective information and communication, and effective monitoring. The study also found out that control activities and risk assessment have significant positive impact on the operational performance of the selected private commercial banks, and control environment and information and communication have insignificant positive impact the operational performance banks in the study. However, according to the research findings monitoring has insignificant negative impact on performance. The study recommends the selected private commercial banks to strengthen control environment, control activities, risk assessment and information and communication to enhance their operational performance.