ERP implementation in banks: success factors & impact on financial performance

  • Received June 30, 2017;
    Accepted September 12, 2017;
    Published November 30, 2017
  • Author(s)
    Munther Al-Nimer , Ahmed Omush , Adel Almasarwah
  • DOI
    http://dx.doi.org/10.21511/bbs.12(4).2017.02
  • Article Info
    Volume 12 2017, Issue #4, pp. 17-30
  • TO CITE АНОТАЦІЯ
  • Cited by
    3 articles
  • 2728 Views
  • 1148 Downloads

Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

The study aims to measure the extent of implementing ERP systems in the banking sector in Jordan, and identify the main factors that influence the implementation decision, in addition to measure the impact of the post-implementation of the ERP system on the financial performance. The study utilized a content analysis as a research instrument. The study of population consisted of all the banks in Jordan, where the study applied ‘Purposive Sample’ type. Therefore, the study included 11 banks from 2011 to 2016.
The study indicated that the implementation year of the ERP system started in most of the Jordanian banks in 2013, and the rates vary from bank to bank according to their importance and the level of awareness. Training courses are considered the main variable that these banks face in the process of implementation. In addition, awareness of the advantages, the cost, and supporting the infrastructure are the core factors needed to influence the implementation decision.
There is no impact when implementing an ERP system on the financial performance of the Jordanian banks in regard to the ROI and the DPS; on the other hand, there is an impact of the ERP system on the overall performance of the banks.
The study recommends to disseminate knowledge on the advantages of implementing of ERP system in Jordanian banks and to develop the IT department efficiency. Moreover, it will be worthwhile to examine the effect of ERP systems by utilizing financial and non-financial measurements.

view full abstract hide full abstract
    • Table 1. Descriptive analysis of the variables prior-implementation of the system
    • Table 2. Descriptive analysis of the variables post-implementation & implementation rate
    • Table 3. One sample Kolmogorov-Smirnov test for the variables
    • Table 4. “T-test” results of ROI prior- and post-implementation of the ERP system
    • Table 5. Simple regression results of the impact of the ERP implementation on ROI
    • Table 6. “T-test” results of EPS prior- and post-implementation of the ERP system
    • Table 7. Simple regression results of the ERP implementation impact on EPS
    • Table 8. “T-test” results of DPS prior- and post-implementation of the ERP system
    • Table 9. Simple regression results of the ERP implementation impact on DPS
Related Articles

  • Industrial development in Saudi Arabia: disparity in growth and development

    Anis AliORCID doi: http://dx.doi.org/10.21511/ppm.18(2).2020.03
    Problems and Perspectives in Management Volume 18, 2020         Issue #2         pp. 23-35 Views: 3048 Downloads: 1033 TO CITE АНОТАЦІЯ

    Industrial development in any nation plays a vital role in the strengthening of the economy and employs human resources as per specifications and directly towards the mainstream of the nation. In Saudi Arabia, there was rapid industrialization for four decades. Some manufacturing industries performed well, while some internal and external business environment factors influenced the others’ performance. The study focuses on historical development, as well as recent trends of well-performing and poor-performing industries of Saudi Arabia. Small manufacturing industries in Saudi Arabia are underdeveloped and need more attention to attain sustainable and progressive growth rate in the form of the number of establishments to enjoy the potential. Manufacture of tobacco, computer, electronics and optics, pharmaceuticals and transport equipment are the deprived and underdeveloped industries of the manufacturing sector. There should be some easy credit schemes for the development of deprived or underdeveloped manufacturing industries. To attain sustainable growth and development of the manufacturing sector, a positive attitude of the government towards underdeveloped manufacturing industries, favorable labor laws, and entrepreneurial awareness, technical and financial assistance are necessary. The growth and development of the manufacturing sector of Saudi Arabia will be helpful in the attainment of goals of Vision 2030.

  • Evaluating the nationalization & privatization effect: a case of Indian banking industry

    Manju Rajan BabuORCID , Ashok Kumar M.ORCID doi: http://dx.doi.org/10.21511/bbs.13(1).2018.02
    Banks and Bank Systems Volume 13, 2018         Issue #1         pp. 11-21 Views: 2874 Downloads: 407 TO CITE АНОТАЦІЯ

    The facilitation of economic transactions and friendly investor environment is undertaken through effective performance of financial systems. Mobilization of savings and funding the profitable business opportunities are essential in improving the efficiency of intermediation. The study aims to evaluate the effects of nationalization and privatization on Indian banks. Various factors have been considered to examine the effects of privatization and nationalization, including sources of public sector inefficiency, measures of firm performance, econometric issues, and the mode of privatization. The data was collected for the period of 1998 to 2016 from Indian banks. Data Envelopment Analysis (DEA) was used to evaluate the financial reports of the banks selected to evaluate the efficiency of input and output variables. Positive results were observed, concerning the efficiency and profitability of banking industry after banks’ privatization. Performance of private banks has been observed effective and efficient as compared to the public sector banks. Privatization of banks must be increased and maintained to sustain the efficiency of the banks and implement strategies to maintain the assets. Future studies may recruit more appropriate sample size to evaluate the privatization and nationalization effects of Indian banking industry. Greater number of banks will provide more precise results, using data envelopment analysis.

  • Why banks should consider ESG risk factors in bank lending?

    Sarwar Uddin AhmedORCID , Samiul Parvez AhmedORCID , Ikramul HasanORCID doi: http://dx.doi.org/10.21511/bbs.13(3).2018.07
    Banks and Bank Systems Volume 13, 2018         Issue #3         pp. 71-80 Views: 2839 Downloads: 1138 TO CITE АНОТАЦІЯ

    Why banks should be concerned about incorporating environmental, social and governance (ESG) criteria in the lending process? What is the motivation? This study aims to find the motives for considering environmental, social and governance (ESG) criteria in bank lending process. A primary survey has been conducted to know the current status and motivation for incorporating ESG factors in investment decisions. Sample comprised 30 private commercial banks (PCBs) operating in Bangladesh. Data collected were analyzed with graphs, descriptive statistics, and regression analysis. Findings of the study indicate that banks are mostly considering basic environmental, social and governance factors set by regulators qualitatively. They are lagging behind in considering the advanced ESG criteria needed for sustainable and efficient credit risk management. Based on motivation for incorporating ESG factors, it was found that banks pioneering in incorporating ESG factors in lending decisions are compensated through better financial performance. Findings of the study are expected to encourage practitioners and policy-makers to take more pragmatic steps to incorporate ESG risk factors quantitatively in lending decision-making process.

Download Preview
Close
Banks and Bank Systems
Banks and Bank Systems