DIGITAL TRANSFORMATION IN ACCOUNTING AND ITS IMPLICATIONS FOR MANAGEMENT PERFORMANCE

Abstract

Digital transformation is reshaping accounting and financial processes in the banking sector through the adoption of artificial intelligence, big-data analytics, blockchain, cloud computing and Internet-of-Things technologies. This study examines the association between accounting-related digital transformation and bank performance among 20 selected NSE-listed banks in India over the period 2015–2024, using 200 bank-year observations. Secondary data were compiled from Reserve Bank of India sources, the Digital Payments Index, bank annual reports, Moneycontrol and CMIE. Digital Transformation in Accounting (DT) is represented by a technology-oriented index capturing the reported adoption of AI, big data, blockchain, cloud computing, IoT and related digital accounting practices. Bank performance is assessed using Return on Assets (ROA) and Return on Equity (ROE), while Operating Cost Ratio (OCR) is examined as a potential transmission mechanism. Bank size and leverage are included as control variables. Panel regression models are used to examine the direct association between DT and performance and the proposed OCR pathway. The reported results show a positive and statistically significant association between DT and both ROA and ROE. DT is also negatively associated with OCR, indicating a relationship between greater digitalisation and lower operating costs relative to operating income. However, OCR is not statistically significant in the ROA model after DT and controls are included; therefore, the reported evidence does not support OCR as a mediator. The study contributes an India-specific empirical perspective on accounting digitalisation and bank performance and highlights the need to distinguish direct performance effects from cost-based transmission mechanisms.