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

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  • Mohammad Abdelkarim Almumani

    ()
    (RCC-King Saud University)

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    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.

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    Bibliographic Info

    Article provided by Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences in its journal International Journal of Academic Research in Accounting, Finance and Management Sciences.

    Volume (Year): 3 (2013)
    Issue (Month): 3 (July)
    Pages: 298-310

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    Handle: RePEc:hur:ijaraf:v:3:y:2013:i:3:p:298-310

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    Web page: http://hrmars.com/index.php/pages/detail/Accounting-Finance-Journal

    Related research

    Keywords: Managerial Factors; Cost efficiency; Liquidity; Credit Risk; Capital adequacy;

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Athanasoglou, Panayiotis & Delis, Manthos & Staikouras, Christos, 2006. "Determinants Of Bank Profitability In The South Eastern European Region," MPRA Paper 10274, University Library of Munich, Germany.
    2. Berger, Allen N, 1995. "The Relationship between Capital and Earnings in Banking," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 27(2), pages 432-56, May.
    3. Goddard, John & Molyneux, Phil & Wilson, John O S, 2004. "Dynamics of Growth and Profitability in Banking," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 36(6), pages 1069-90, December.
    4. Fadzlan Sufian, 2011. "Profitability of the Korean Banking Sector: Panel Evidence on Bank-Specific and Macroeconomic Determinants," Journal of Economics and Management, College of Business, Feng Chia University, Taiwan, vol. 7(1), pages 43-72, January.
    5. Farhad F. Ghannadian & Gautam Goswami, 2004. "Developing economy banking: the case of Islamic banks," International Journal of Social Economics, Emerald Group Publishing, vol. 31(8), pages 740-752, July.
    6. Alper, Deger & Anbar, Adem, 2011. "Bank Specific and Macroeconomic Determinants of Commercial Bank Profitability: Empirical Evidence from Turkey," Business and Economics Research Journal, Uludag University, Faculty of Economics and Administrative Sciences, vol. 2(2), pages 139, April.
    7. Bourke, Philip, 1989. "Concentration and other determinants of bank profitability in Europe, North America and Australia," Journal of Banking & Finance, Elsevier, vol. 13(1), pages 65-79, March.
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