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Impact of Managerial Factors on Commercial Bank Profitability: Empirical Evidence from Jordan

Mohammad Abdelkarim Almumani ()
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Mohammad Abdelkarim Almumani: RCC-King Saud University

International Journal of Academic Research in Accounting, Finance and Management Sciences, 2013, vol. 3, issue 3, 298-310

Abstract: The objective of this paper is to determine the management controllable factors that determine bank’s profitability of the Jordanian commercial banks listed in Amman Stock of Exchange (ASE). For this, the bank-specific variables are derived from the income statements and the balance sheets of commercial banks published in ASE. Excluding Islamic banks, thirteen Jordanian commercial banks listed in ASE since 2000 were selected (91 observations) over the 2005-2011 intervals. This paper uses descriptive analysis(includes the mean, minimum, maximum, median and standard deviation), financial ratios analysis, Pearson correlation analysis, regression analysis, analysis of variance (ANOVA) and the natural logarithm to implicate the results with the hypotheses. The factors taken into consideration are Profitability measured by ROA, measured by Cost efficiency CIR, measured by Liquidity LADST, measured by Credit Composition measured by NCTA, Credit Risk measured by PRCF, Capital adequacy measured by TETA and the Bank Size measured by SZE. The major outcome of this study is that the cost income ratio is the major endogenous factors under the control of management that determines the profitability of the commercial banks in Jordan. Other variables, such as LADST, NCTA, PRCF, TETA and SZE did not show any statistical effect on profitability.

Keywords: Managerial Factors; Cost efficiency; Liquidity; Credit Risk; Capital adequacy (search for similar items in EconPapers)
Date: 2013
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