THE MEDIATION ROLE OF BANKS' PERFORMANCE FOR THE IMPACT OF INTERNAL AUDIT QUALITY AND FINANCIAL EXPERTISE ON FINANCIAL REPORTING QUALITY IN LIBYAN BANKING INDUSTRY

Abstract

This paper investigates the dynamic relationships between Internal Audit Quality, Financial Expertise, Bank Performance, and Financial Reporting Quality within the Libyan banking sector. Employing quantitative research methods, the study analyzes data from a survey of 377 banking employees and managers, focusing on the direct and indirect influences of Internal Audit Quality and Financial Expertise on Financial Reporting Quality, with a particular interest in the mediating role of Bank Performance. The findings reveal that both Internal Audit Quality and Financial Expertise significantly impact Financial Reporting Quality through the mediation of Bank Performance. The research contributes to the understanding of how strengthening internal governance and enhancing financial knowledge within banks can lead to improved financial reporting. Recommendations are provided for banks to invest in their audit functions and financial education, and for regulators to enforce policies that promote these areas. The study suggests that such investments and policies can elevate the overall health of the banking sector, enhancing transparency and reliability in financial reporting, which is crucial for the stability and growth of the financial system. Future research is encouraged to further explore these relationships and their implications across different sectors and over time.