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Does Liquidity and Solvency Affect Banks Profitability? Evidence from Listed Banks in Jordan

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  • Ahmad Dahiyat

Abstract

This paper examines the impact of liquidity and solvency on banks profitability. All banks listed in Amman exchange were selected (15 banks) for the period 2012- 2014. To measure the liquidity the quick ratio was calculated, Debt ratio was calculated to measure the solvency, whereas return on assets ratio was calculated to measure the profitability. Simple regression was used to examine the relations; the results showed that the liquidity has a negative (inverse) significant impact on profitability, whereas the solvency has a no impact on profitability.

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  • Ahmad Dahiyat, 2016. "Does Liquidity and Solvency Affect Banks Profitability? Evidence from Listed Banks in 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. 6(1), pages 35-40, January.
    • Handle: RePEc:hur:ijaraf:v:6:y:2016:i:1:p:35-40
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    References listed on IDEAS

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    1. 0. De Bandt & B. Camara & P. Pessarossi & M. Rose, 2014. "Does the capital structure affect banks’ profitability? Pre- and post financial crisis evidence from significant banks in France," Débats économiques et financiers 12, Banque de France.
    2. Mazen Kebewar, 2013. "The effect of Debt on Corporate Profitability :Evidence from French Service Sector," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 56(1), pages 43-59.
    3. Dr. Maher Odeh Al-Shamaileh & Salim. M. Khanfar, 2014. "The Effect of the Financial Leverage on the Profitability in the Tourism Companies (Analytical Study- Tourism Sector- Jordan)," Business and Economic Research, Macrothink Institute, vol. 4(2), pages 251-264, December.
    4. Étienne Bordeleau & Christopher Graham, 2010. "The Impact of Liquidity on Bank Profitability," Staff Working Papers 10-38, Bank of Canada.
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