Banking sector is the main pillar to augment sustainable economic development. Conventional banks perform a major role to enhance financial sector performance, and their success is intrinsically connected to the entire economy soundness. The primary objective of several banks is to achieve and maintain consistent growth in their financial performance. Internal factors are considered crucial catalysts on conventional banks performance metrics. Banks in Jordan have excessive contributions to the country development. The study focused on the commercial banks listed at ASE in Jordan, to examine the impact of banks’ specific factors on performance indicators denoted by (Return on Assets—ROA, and Stock Market Value—SMV) using OLS methodology. The results indicated a positive weak significant effect of credit ratio (CR) and credit-to-deposit ratio (CTD) on ROA, and that liquidity ratio (LR), total assets (TA), and operational cash flow (OCF) shown a negative impact on ROA, while capital adequacy indicated no significant impact. Regarding the second performance indicator Stock Market Value (SMV), DR, CTD, and OCF have shown a significant positive impact on SMV; however, LR and TA have demonstrated an adverse impact on SMV, but CA has reflected an adverse impact but not significant. The results also inclined that more than 90% of the changes that occur to both indicators (ROA and SMV) are due to the changes of the study independent variables. In reference to the aforementioned outcomes, the study suggests that banks’ management and investors in stock should focus more on metrics and ratios that reflected a significant effect on the performance indicators to improve the bank’s profitability which ultimately will be reflected on stock market price.

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Assessing the Power of Bank-Specific Variables on Commercial Banks Performance Indicators

  • Qais kilani,
  • Thair A. Kaddumi,
  • Yaseen S. Alhaj-Yaseen,
  • Abd Al-Salam Ahmad Al-Hamad

摘要

Banking sector is the main pillar to augment sustainable economic development. Conventional banks perform a major role to enhance financial sector performance, and their success is intrinsically connected to the entire economy soundness. The primary objective of several banks is to achieve and maintain consistent growth in their financial performance. Internal factors are considered crucial catalysts on conventional banks performance metrics. Banks in Jordan have excessive contributions to the country development. The study focused on the commercial banks listed at ASE in Jordan, to examine the impact of banks’ specific factors on performance indicators denoted by (Return on Assets—ROA, and Stock Market Value—SMV) using OLS methodology. The results indicated a positive weak significant effect of credit ratio (CR) and credit-to-deposit ratio (CTD) on ROA, and that liquidity ratio (LR), total assets (TA), and operational cash flow (OCF) shown a negative impact on ROA, while capital adequacy indicated no significant impact. Regarding the second performance indicator Stock Market Value (SMV), DR, CTD, and OCF have shown a significant positive impact on SMV; however, LR and TA have demonstrated an adverse impact on SMV, but CA has reflected an adverse impact but not significant. The results also inclined that more than 90% of the changes that occur to both indicators (ROA and SMV) are due to the changes of the study independent variables. In reference to the aforementioned outcomes, the study suggests that banks’ management and investors in stock should focus more on metrics and ratios that reflected a significant effect on the performance indicators to improve the bank’s profitability which ultimately will be reflected on stock market price.