Effect of Financial Reporting Quality on Operational Performance of Commercial Banks: A Case of Bank of Kigali, Rwanda

Kabengera Amizero Louis Oreste and Tarus Thomas
University of Kigali
https://orcid.org/0009-0006-9266-4390
Email: louisoreste@gmail.com

Abstract: Rwanda’s commercial banks face several financial reporting quality challenges, including inconsistent reporting practices, lack of transparency, inadequate financial disclosures, delayed reporting, and limited adoption of international financial reporting standards (IFRS). This study investigated the effect of financial reporting quality on the operational performance of commercial banks in Rwanda, focusing on Bank of Kigali. It examined financial reporting accuracy, completeness, and compliance. Agency Theory, Information Theory, and Signaling Theory guided the study. A descriptive and correlational design was adopted, with a census of 115 employees across six departments. Questionnaires and interviews supported data collection, and 104 completed questionnaires were returned, representing a response rate of 90.4%. Data were analysed using descriptive statistics, Pearson correlation, and multiple regression in SPSS version 25. The model yielded R = 0.822, R² = 0.676, and adjusted R² = 0.666. Financial reporting accuracy (B = 0.390, p < 0.001) and completeness (B = 0.356, p < 0.001) were positive, statistically significant predictors of operational performance. Compliance had a positive but statistically insignificant coefficient (B = 0.118, p = 0.244). Thus, the first two null hypotheses were rejected, while the third was not rejected. The study recommended stronger pre-publication verification, standardized disclosure templates, and regular compliance training and monitoring.