Effects of Internal and External Factors on Profitability of Jordanian Commercial Banks: Panel Data Approach
This article assesses the effects of internal and external factors on the profitability of Jordanian commercial banks. A panel data set of thirteen commercial banks between 2000 and 2018 was used. Pooled ordinary least squares, random and fixed models were applied. Moreover, a Hausman test was perfo...
Saved in:
| Main Authors: | , , |
|---|---|
| Other Authors: | |
| Format: | Article |
| Published: |
Sciedu Press
2023
|
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| _version_ | 1833411631081586688 |
|---|---|
| author | Bekhet H.A. Mohammad Alsmadi A. Khudari M. |
| author2 | 37100908800 |
| author_facet | 37100908800 Bekhet H.A. Mohammad Alsmadi A. Khudari M. |
| author_sort | Bekhet H.A. |
| building | UNITEN Library |
| collection | Institutional Repository |
| content_provider | Universiti Tenaga Nasional |
| content_source | UNITEN Institutional Repository |
| continent | Asia |
| country | Malaysia |
| description | This article assesses the effects of internal and external factors on the profitability of Jordanian commercial banks. A panel data set of thirteen commercial banks between 2000 and 2018 was used. Pooled ordinary least squares, random and fixed models were applied. Moreover, a Hausman test was performed to confirm the suitability of models, which was preferred on the random effect model. Also, a Wooldridge test for serial correlation and a modified Wald test for groupwise Heteroskedasticity were used and both of their null hypotheses were rejected. However, to deal with these problems, a robustness analysis was performed using feasible generalized least square. The findings suggested that internal factors and in particular, bank size and diversification, had positive effects on bank profitability, while credit risk, operational risk and leverage risk were negatively related to bank performance. However, capital risk had a positive but insignificant impact on bank profitability. As for the effect of external factors, the results suggested that financial development and inflation had a positive and significant impact on bank profitability, while market concentration and stock market volatility had a significant negative effect on bank profitability. Further, a negative and insignificant impact were found for GDP and refugee crisis on bank profitability in Jordan. The findings would help managers of commercial banks, investors, government, policy makers and shareholders to make better decisions and improve performance by highlighting areas of weaknesses. In general, policy makers should become more aware with these insights on profit determinants in Jordanian commercial banks. � 2020 |
| format | Article |
| id | my.uniten.dspace-25203 |
| institution | Universiti Tenaga Nasional |
| publishDate | 2023 |
| publisher | Sciedu Press |
| record_format | dspace |
| spelling | my.uniten.dspace-252032023-05-29T16:07:19Z Effects of Internal and External Factors on Profitability of Jordanian Commercial Banks: Panel Data Approach Bekhet H.A. Mohammad Alsmadi A. Khudari M. 37100908800 57219966640 57211608540 This article assesses the effects of internal and external factors on the profitability of Jordanian commercial banks. A panel data set of thirteen commercial banks between 2000 and 2018 was used. Pooled ordinary least squares, random and fixed models were applied. Moreover, a Hausman test was performed to confirm the suitability of models, which was preferred on the random effect model. Also, a Wooldridge test for serial correlation and a modified Wald test for groupwise Heteroskedasticity were used and both of their null hypotheses were rejected. However, to deal with these problems, a robustness analysis was performed using feasible generalized least square. The findings suggested that internal factors and in particular, bank size and diversification, had positive effects on bank profitability, while credit risk, operational risk and leverage risk were negatively related to bank performance. However, capital risk had a positive but insignificant impact on bank profitability. As for the effect of external factors, the results suggested that financial development and inflation had a positive and significant impact on bank profitability, while market concentration and stock market volatility had a significant negative effect on bank profitability. Further, a negative and insignificant impact were found for GDP and refugee crisis on bank profitability in Jordan. The findings would help managers of commercial banks, investors, government, policy makers and shareholders to make better decisions and improve performance by highlighting areas of weaknesses. In general, policy makers should become more aware with these insights on profit determinants in Jordanian commercial banks. � 2020 Final 2023-05-29T08:07:19Z 2023-05-29T08:07:19Z 2020 Article 10.5430/ijfr.vlIn5p359 2-s2.0-85096302125 https://www.scopus.com/inward/record.uri?eid=2-s2.0-85096302125&doi=10.5430%2fijfr.vlIn5p359&partnerID=40&md5=83bc116f940c185ea418a58240067e75 https://irepository.uniten.edu.my/handle/123456789/25203 11 5 359 375 Sciedu Press Scopus |
| spellingShingle | Bekhet H.A. Mohammad Alsmadi A. Khudari M. Effects of Internal and External Factors on Profitability of Jordanian Commercial Banks: Panel Data Approach |
| title | Effects of Internal and External Factors on Profitability of Jordanian Commercial Banks: Panel Data Approach |
| title_full | Effects of Internal and External Factors on Profitability of Jordanian Commercial Banks: Panel Data Approach |
| title_fullStr | Effects of Internal and External Factors on Profitability of Jordanian Commercial Banks: Panel Data Approach |
| title_full_unstemmed | Effects of Internal and External Factors on Profitability of Jordanian Commercial Banks: Panel Data Approach |
| title_short | Effects of Internal and External Factors on Profitability of Jordanian Commercial Banks: Panel Data Approach |
| title_sort | effects of internal and external factors on profitability of jordanian commercial banks: panel data approach |
| url_provider | http://dspace.uniten.edu.my/ |