Internal audit and financial performance of Yemeni commercial banks: Empirical evidence

  • Received December 28, 2020;
    Accepted April 13, 2021;
    Published June 15, 2021
  • Author(s)
  • DOI
  • Article Info
    Volume 16 2021 , Issue #2, pp. 137-147
  • Cited by
    4 articles

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

This study seeks to verify the contribution of internal audit (IA), especially its role in improving financial performance in Yemeni commercial banks, with a specific focus on three factors, namely: the independence and objectives of IA, the quality of IA and the size of IA. This study reviews some existing literature on the contribution and role of IA in improving financial performance. It relies on available data from questionnaires. 90 questionnaires were distributed to nine commercial banks in Yemen (23 branches) working under the supervision of the Central Bank of Yemen; 81 questionnaires (90%) were regained and used in the process of analysis. To analyze the data, three analysis approaches were used, including description, correlation, and regression. The results showed that the IA has a significant impact on the overall performance of Yemeni commercial banks. Furthermore, the results showed that the auditors’ efficiencies, as well as their financial and accounting experiences, have a significant and positive impact on financial performance. It was revealed that the independence and objectivity of internal auditors are highly insignificant for financial performance. However, the size of IA and the frequency of the auditors’ meetings have a negative and significant effect on financial performance. This study provides some recommendations for improving the effectiveness of IA, which in turn will contribute to improving financial performance.

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    • Table 1. Reliability statistics
    • Table 2. Descriptive analysis results
    • Table 3. Correlation matrix
    • Table 4. Durbin-Watson test
    • Table 5. Multiple regression results
    • Conceptualization
      Saddam A. Hazaea, Mosab I. Tabash
    • Formal Analysis
      Saddam A. Hazaea, Saleh F. A. Khatib
    • Investigation
      Saddam A. Hazaea, Mosab I. Tabash, Saleh F. A. Khatib, Najib H. S. Farhan
    • Writing – original draft
      Saddam A. Hazaea
    • Supervision
      Mosab I. Tabash, Saleh F. A. Khatib, Najib H. S. Farhan
    • Writing – review & editing
      Mosab I. Tabash
    • Data curation
      Jinyu Zhu
    • Methodology
      Jinyu Zhu
    • Software
      Jinyu Zhu
    • Visualization
      Jinyu Zhu
    • Funding acquisition
      Saleh F. A. Khatib
    • Project administration
      Najib H. S. Farhan
    • Validation
      Najib H. S. Farhan