THE EFFECT OF BUDGETING PROCESS ON THE FINANCIAL PERFORMANCE OF BANKING INSTITUTIONS IN TANZANIA

Abstract

ABSTRACT

This study focused on the effect of budgeting process on the financial performance of the banking institutions in Tanzania. This study was conducted at CRDB bank plc, because is one of the leading banks in Tanzania with great success in terms of financial performance. The study provides the effect of budgetary participation, budget feedback and budgetary control on the financial performance of the banking institutions. The study employed quantitative approach and random sampling to select 97 staff from CRDB bank. Data were collected by using structured questionnaire in relation to budgetary participation, budget feedback, budgetary control and financial performance. The study used descriptive and multiple regression analysis to analyze data, this was aided by Statistical Package for Social Science (SPSS). The study's results indicate that all three aspects of the budgeting process positively influence the financial performance of banking institutions in Tanzania. Specifically, budgetary participation was found to enhance financial performance by fostering employee commitment and improving resource allocation. Additionally, budget feedback significantly impacted financial performance by enabling informed decision-making and enhancing financial transparency. Furthermore, effective budgetary control was shown to optimize resource allocation and manage operational costs, leading to increased profitability. The study concluded that budgetary participation, budget feedback, and budgetary control significantly enhance the financial performance of banking institutions in Tanzania.