The contribution of banking services in enhancing the profitability of Jordanian commercial banks

Mohammad W. Alomari, Ala G. Bashayreh and Abla S. Tahtamouni

Business and Economic Horizons (BEH), 2018, vol. 14, issue 5

Abstract: Banks have traditionally been in the primacy of utilizing technology to enhance their products, services and efficiency. Investing in new financial technology services may enhance the bank's profitability; but at the same time it may increase costs. Thus, the effect of employing e-services is not obvious and requires to be tested. The study aims at estimating the effect of technological progress on banks performance measured by return on equity (ROE) in 13 Jordanian commercial banks over the period 2011-2016 using panel data. Results reveal that ATMs ratio, ratio of a bank’s branches number, the ratio of visa cards number of each bank out of the total number of visa cards issued by all banks, and the ratio of total credit facilities granted by each bank affect profitability positively as proxied by ROE. On the other hand, the ratio of master cards number of each bank out of the total number of master cards issued by all banks is not significant. The study examines six dummy variables and found that cash withdrawals in foreign currencies and cash transfer within the same bank are the most important services (dummies) that affect bank’s profitability.

Keywords: Public; Economics (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:ags:pdcbeh:287245

DOI: 10.22004/ag.econ.287245

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