IDEAS home Printed from https://ideas.repec.org/a/hur/ijaraf/v3y2013i3p298-310.html
   My bibliography  Save this article

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

Author

Listed:
  • Mohammad Abdelkarim Almumani

    (RCC-King Saud University)

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.

Suggested Citation

  • Mohammad Abdelkarim Almumani, 2013. "Impact of Managerial Factors on Commercial Bank Profitability: Empirical Evidence from Jordan," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 3(3), pages 298-310, July.
    • Handle: RePEc:hur:ijaraf:v:3:y:2013:i:3:p:298-310
    as

    Download full text from publisher

    File URL: http://hrmars.com/hrmars_papers/Article_34_Impact_of_Managerial_Factors_on_Commercial_Bank.pdf
    Download Restriction: no
    File URL: http://hrmars.com/hrmars_papers/Article_34_Impact_of_Managerial_Factors_on_Commercial_Bank.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Jacob A. Bikker & Haixia Hu, 2002. "Cyclical patterns in profits, provisioning and lending of banks and procyclicality of the new Basel capital requirements," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 55(221), pages 143-175.
    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 432-456, 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 1069-1090, December.
    4. 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.
    5. 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 139-139, April.
    6. Pasiouras, Fotios & Kosmidou, Kyriaki, 2007. "Factors influencing the profitability of domestic and foreign commercial banks in the European Union," Research in International Business and Finance, Elsevier, vol. 21(2), pages 222-237, June.
    7. Sehrish Gul & Faiza Irshad & Khalid Zaman, 2011. "Factors Affecting Bank Profitability in Pakistan," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 14(39), pages 61-87, March.
    8. 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.
    9. Bashir, Abdel-Hameed M., 2003. "Determinants Of Profitability In Islamic Banks: Some Evidence From The Middle East," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 11, pages 32-57.
    10. Constantinos Alexiou & Voyazas Sofoklis, 2009. "Determinants Of Bank Profitability: Evidence From The Greek Banking Sector," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 54(182), pages 93-118, July – Se.
    11. 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.
    12. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Le Ngoc Thuy Trang & Do Thi Thanh Nhan & Nguyen Thi Nhu Hao & Wing-Keung Wong, 2021. "Does Bank Liquidity Risk Lead To Bank'S Operational Efficiency? A Study In Vietnam," Advances in Decision Sciences, Asia University, Taiwan, vol. 25(4), pages 46-88, December.
    2. Azize Esmeray & Murat Esmeray, 2016. "The Determinants of Earnings in Turkey Evidence from Panel Analysis," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 6(1), pages 123-126, January.
    3. Abayomi Oredegbe, 2020. "Canadian Banking Industry Profitability: Exploring the Relevance of Two Competing Hypotheses," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 12(4), pages 1-67, April.
    4. Christian John Mbekomize & Mogotsinyana Mapharing, 2017. "Analysis of Determinants of Profitability of Commercial Banks in Botswana," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 7(2), pages 131-144, April.
    5. du Toit, Elda & Cuba, Yolanda Z., 2018. "Cost and profit efficiency of listed South African banks pre and post the financial crisis," Research in International Business and Finance, Elsevier, vol. 45(C), pages 435-445.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Faluk Shair & Na Sun & Sun Shaorong & Firdos Atta & Muhammad Hussain, 2019. "Impacts of risk and competition on the profitability of banks: Empirical evidence from Pakistan," PLOS ONE, Public Library of Science, vol. 14(11), pages 1-27, November.
    2. Alexandra Horobet & Magdalena Radulescu & Lucian Belascu & Sandra Maria Dita, 2021. "Determinants of Bank Profitability in CEE Countries: Evidence from GMM Panel Data Estimates," JRFM, MDPI, vol. 14(7), pages 1-23, July.
    3. Gazmend Nure, 2019. "The Impact of Specific Banking, Industrial and Macroeconomic Factors on Bank Profitability: Evidence from the Albanian Banking System," Business and Economic Research, Macrothink Institute, vol. 9(2), pages 182-198, June.
    4. Olalere Oluwaseyi Ebenezer & Wan Ahmad Wan Bin Omar & Syahida Kamil, 2017. "Bank Specific and Macroeconomic Determinants of Commercial Bank Profitability: Empirical Evidence from Nigeria," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 6(1), pages 25-38, January.
    5. Tan, Yong, 2016. "The impacts of risk and competition on bank profitability in China," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 40(C), pages 85-110.
    6. Julius Yaw Asamoah & Linda Owusu-Agyei, 2020. "The Impact of ICT on Financial Sector Policy Reforms in Post-Financial crisis era in Ghana: An institutional theory perspective," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 9(2), pages 82-100, April.
    7. Marcin Korytowski, 2018. "Banks’ profitability determinants in post-crisis European Union," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 7(1), pages 01-12, January.
    8. Mehmet Sabri Topak & Nimet Hulya Talu, 2017. "Bank Specific and Macroeconomic Determinants of Bank Profitability: Evidence from Turkey," International Journal of Economics and Financial Issues, Econjournals, vol. 7(2), pages 574-584.
    9. Ali, Muhammad, 2015. "Bank profitability and its determinants in Pakistan: A panel data analysis after financial crisis," MPRA Paper 67987, University Library of Munich, Germany, revised 01 Nov 2015.
    10. Sufian, Fadzlan & Habibullah, Muzafar Shah, 2010. "Does economic freedom fosters banks’ performance? Panel evidence from Malaysia," Journal of Contemporary Accounting and Economics, Elsevier, vol. 6(2), pages 77-91.
    11. Fadzlan Sufian & Muzafar Habibullah, 2009. "Bank specific and macroeconomic determinants of bank profitability: Empirical evidence from the China banking sector," Frontiers of Economics in China, Springer;Higher Education Press, vol. 4(2), pages 274-291, June.
    12. Majid Karimzadeh & S. Jawed Akhtar & Behzad Karimzadeh, 2013. "Determinants of Profitability of Banking Sector in India," Transition Studies Review, Springer;Central Eastern European University Network (CEEUN), vol. 20(2), pages 211-219, October.
    13. Daniel Mokatsanyane & Paul-Francois Muzindutsi & Diana Viljoen, 2017. "Credit Risk and Securitisation in the South African Banking Sector," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 13(2), pages 102-121, April.
    14. Muhammad Mahmood Shah Khan & Farrukh Ijaz & Ejaz Aslam, 2014. "Determinants of Profitability of Islamic Banking Industry: An Evidence from Pakistan," Business & Economic Review, Institute of Management Sciences, Peshawar, Pakistan, vol. 6(2), pages 27-46, October.
    15. Ha Nguyen, 2023. "Credit Risk and Financial Performance of Commercial Banks: Evidence from Vietnam," Papers 2304.08217, arXiv.org, revised Apr 2023.
    16. Boutheina HASHEM & Hiyam SUJUD, 2019. "Financial Performance of Banks in Lebanon: Conventional vs Islamic," International Business Research, Canadian Center of Science and Education, vol. 12(2), pages 40-51, February.
    17. Song l KAK LL ACARAVCI & Ahmet Ertugrul ALIM, 2013. "Turkish Banking Sector's Profitability Factors," International Journal of Economics and Financial Issues, Econjournals, vol. 3(1), pages 27-41.
    18. Mariarosa Borroni & Mariacristina Piva & Simone Rossi, 2016. "Determinants of Bank Profitability in the Euro Area: Has Anything Changed?," DISCE - Quaderni del Dipartimento di Scienze Economiche e Sociali dises1619, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    19. Valentina Flamini & Miss Liliana B Schumacher & Mr. Calvin A McDonald, 2009. "The Determinants of Commercial Bank Profitability in Sub-Saharan Africa," IMF Working Papers 2009/015, International Monetary Fund.
    20. Fakhri J. Hasanov & Nigar Bayramli & Nayef Al-Musehel, 2018. "Bank-Specific and Macroeconomic Determinants of Bank Profitability: Evidence from an Oil-Dependent Economy," IJFS, MDPI, vol. 6(3), pages 1-21, September.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hur:ijaraf:v:3:y:2013:i:3:p:298-310. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Hassan Danial Aslam (email available below). General contact details of provider: http://hrmars.com/index.php/pages/detail/Accounting-Finance-Journal .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.