TITLE:
Assessment of Management Accounting Decision Making in Banking: Alignment and Appropriation of Distribution Cost
AUTHORS:
Patrick Darkwa
KEYWORDS:
Management Accounting, Decision-Making, Distribution Cost, Cost Alignment, Lending Rate, Commercial Banks, Dynamic GMM Estimator
JOURNAL NAME:
Open Journal of Accounting,
Vol.11 No.2,
April
25,
2022
ABSTRACT: This study investigated how the management accounting decision-making framework is applied in the alignment of distribution cost within the banking
business model by analyzing the extent of pass-through of commercial banks’
distribution cost to interest rates on loans and advances. Data from 2010 to 2018 on commercial banks’ lending rate and
financial statement variables thought
to influence commercial banks’ distribution cost structure were extracted
from the annual financial reports of ten commercial banks. Using the Arellano-Bond and Bover Dynamic Panel Generalized Method of
Moments Estimator (GMM),
the study finds that, the pass-through from commercial banks’ cost structure to lending rate is significant but low. It was
ascertained that, a percentage increase in commercial banks’ cost structure
causes an increase from 11% to 15% in lending rate. The study further finds
a long-run relationship between cost expenditure of commercial
banks’ and the factors thought to
influence cost structure. Cost management and strategic pricing behaveour
other than what economic theory proposed were eminent in the findings of this study.