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Financial Information Influencing Commercial Banks Profitability

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  • Dhiaa Shamki
  • Ibrahim Alulis
  • Karima Sayari

Abstract

The paper investigates the influence of bank capital ratio, size and loans on the profitability of a commercial bank in Jordan. It also evaluates whether returns on Assets (ROA) or returns on equity (ROE) is the better indicator that reflects bank profitability. Two Multiple regression models are used to test the influence of capital ratio, size and loans of a commercial bank on its profitability indicators measured by ROA and ROE and to detect the superiority between the two indicators for 13 Jordanian commercial banks for the period 2005-2013. The results of the study showed that capital ratio, size and loans have insignificant influence on ROA, but not on ROE except bank size. Regarding ROE, significant negative and positive influence for capital ratio and loans respectively are concluded. Although the small number of commercial banks in Jordan and some variables have not been well researched in literature, the paper presents a sight to associate bank performance/profitability proxied by ROA and ROE with its capital ratios, size and loans. Our results might assist bank management to capitalize the factors that could improve banks performance and hedge against the adverse factors.

Suggested Citation

  • Dhiaa Shamki & Ibrahim Alulis & Karima Sayari, 2016. "Financial Information Influencing Commercial Banks Profitability," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 8(6), pages 166-166, June.
    • Handle: RePEc:ibn:ijefaa:v:8:y:2016:i:6:p:166
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    Cited by:

    1. Erna Handayani & Alni Rahmawati & Naelati Tubastuvi & Ira Hapsari, 2021. "Performance analysis of sharia commercial banks in Indonesia before the covid pandemic period (2015-2019)," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 10(2), pages 228-237, March.

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    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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