The Effect of Internal Control on the Competitive Advantage of the Bank

Abstract

The current study aims at identifying the effect of internal control on the competitive advantage of the bank with its three dimensions (administrative, financial and operational control) on the competitive advantage of the bank. The analytical, descriptive and deductive approaches were applied in the current study. The current study is a field study in terms of nature and explanatory in terms of purpose because it aims at revealing the cause and effect between internal control and competition. In terms of time horizon, it is a cross-sectional study applied on a sample that composes of all employees of the internal control department in banks.137 questionnaires were distributed to the employees of Internal Control Department of the banks; 106 of which were retrieved, with a recovery rate of 77.36%. Statistical Package for the Social Sciences (SPSS) was used to test the hypotheses of the study and to answer its questions through Simple & Multiple Linear Regression. Among the most important results of the study was a statistically significant effect of internal control (administrative, financial and operational control) on the competitive advantage of the bank. The study recommended the establishment of an efficient internal control department through linking it to the director of audit or the general manager, and the feedback of such department shall be taken into consideration and the reasons of such feedback shall be identified without delay in order to reduce the risks, increase profits and raise the level of performance, and thus, increase the competitive advantage of the bank.