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Explaining the Behavior of Fluctuations in the Returns of Jordanian Banks: An Analytical Study

Author

Listed:
  • Khaled Abdalla AL-Tamimi
  • Samer Fakhri Obeidat
  • Emad Saud Hajjat

Abstract

Purpose: The study attempted to identify the most important factors that affect the investment returns of Jordanian banks ’shares in the financial market. Design/Approach/Methodology: By using statistical models and lag time variables (one year lag) to interpret the return on investment per share in the current year, it is concluded that there was no statistically significant effect of the following independent factors: capital adequacy, surpluses, cash, market value-added, liquidity ratio, and trading volume on return on investment for commercial bank shares. Findings: The study showed a statistically significant effect of the size of the assets and the tax rate on the return on investment of commercial banks' shares. Moreover, the independent factors explain 55% of the fluctuations that occur in the profitability of banks. Practical Implication: The study recommends paying attention to intellectual capital (added market value). It was not statistically significant and important as a factor that reflects the extent of banking awareness among clients and the extent of their acceptance of banks' new banking services. Originality/value: This study is original and attempted to identify the most important factors that affect the investment returns of Jordanian banks ’shares in the financial market.

Suggested Citation

  • Khaled Abdalla AL-Tamimi & Samer Fakhri Obeidat & Emad Saud Hajjat, 2020. "Explaining the Behavior of Fluctuations in the Returns of Jordanian Banks: An Analytical Study," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(4), pages 70-77.
    • Handle: RePEc:ers:ijebaa:v:viii:y:2020:i:4:p:70-77
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    More about this item

    Keywords

    Banks returns; investment returns; capital adequacy; surplus cash; market value added; liquidity ratio.;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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