JORDANIAN BANKING SYSTEM: ANALYSIS OF TECHNICAL EFFICIENCY AND PERFORMANCE

Abla S. Tahtamouni, Mohammad W. Alomari, Ala Bashayreh and Samer Abdelhadi
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Abla S. Tahtamouni: The Hashemite University, Department of Banking and Finance, Jordan.
Mohammad W. Alomari: The Hashemite University, Department of Economics, Jordan.
Ala Bashayreh: The Hashemite University, Department of Economics, Jordan.
Samer Abdelhadi: The Hashemite University, Department of Economics, Jordan.

Studii Financiare (Financial Studies), 2020, vol. 24, issue 3, 23-40

Abstract: The purpose of this study is to examine the connection between technical efficiency and banks’ performance for 13 commercial banks in Jordan over the period 2010-2017. For this purpose, this study will employ the nonparametric model using the linear programming by Data Envelopment Analysis (DEA) to calculate technical efficiency and the panel regression analysis to estimate the relationship between technical efficiency and Banks’ performance measured by return on asset (ROA), return on equity (ROE) and Tobin’s Q. The empirical findings reveal that pure technical efficiency (PTE) is statistically significant with positive effect on ROA, ROE and Tobin’s Q. Further, the relative technical efficiency (RTE) or scale efficiency (SE) has positive significant impact on ROA, ROE, and Tobin’s Q. The market share and the ATMs coverage share also has a positive effect on bank’s performance. On the other hand, bank’s size has no significant effect on ROA and ROE but weak positive effect on Tobin’s Q.

Keywords: Technical Efficiency; Banks’ Performance; Commercial Banks; Data Envelopment Analysis Pages: 23-40 (search for similar items in EconPapers)
JEL-codes: G14 G21 L25 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (1)

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