Influences on the Use of Multi-dimensional Performance Measures in Banks: An Institutional Perspective

This study empirically examines the influences of competition, institutional factors and top management participation (TMP) on the use of multi-dimensional performance measures (MPM) in banks. Additionally, interaction effects such as the mediating effect of TMP in the relationship between the influence of the central bank and MPM are also tested. Furthermore, the moderating influence of market competition in the relationship between TMP and MPM use has also been examined. Data were obtained from a survey of top-level management from the population of locally owned 34 commercial banks (CBs) in Bangladesh and post-survey interviews of a smaller sample (n = 14) of the survey respondents. The new institutional sociology perspective was primarily used to identify the influencing factors. The data were analysed using a partial least squares technique. The results indicate that competitive pressures, influence of the central bank and pressure from the success of peer banks are the factors that drive the use of MPM in CBs in Bangladesh. The results also suggest that TMP is associated with the use of MPM. Nevertheless, there was no evidence to support a relationship between socio-political institutions, professional and trade associations, and the use of MPM. Additional analysis undertaken in this study evidenced the mediating effect of TMP in understanding the relationship between central bank influence and the use of MPM. The study also found that TMP in using more MPM is increased when competition is intense in the industry.