Effectiveness of IT Governance and its Impact on the Financial Reporting Reliability in Libyan Commercial Banks
DOI:
https://doi.org/10.37375/esj.v9i2.4390Abstract
IT (Information Technology) governance systems have become a critical determinant of institutional stability, operational resilience, and strategic alignment within the contemporary banking sector. Recognizing this imperative, the Central Bank of Libya (CBL) issued the IT Governance Guideline 2023, establishing mandatory IT governance requirements for all commercial banks operating within the country. However, empirical research assessing the implementation of these regulatory mandates in transitional economies remains limited. This study investigates the implementation of these regulatory mandates across 12 Libyan commercial banks and their implications for financial reporting reliability. The research evaluates IT governance maturity across 87 accounting and auditing professionals, supported by qualitative insights from 18 senior financial executives and internal auditors. The empirical findings reveal an average IT governance maturity level of 2.41 on a five-point scale, representing a statistically significant deficiency of 0.79 points below the mandatory regulatory target of 3.2. Furthermore, ANOVA results confirm that large financial institutions significantly outperform smaller banks in maintaining IT governances. Hierarchical regression analysis reveals that institutional pressures, accounting resources, and audit committee literacy jointly explain 58.4% of control maturity variance. Qualitative findings identify legacy accounting information systems, acute shortages of certified IT auditors, and institutional decoupling as key factors undermining financial statement reliability. This study contributes to the accounting literature by establishing an empirical link between digital governance mandates and control quality in transitional banking systems
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