Determinants of Financial Performance for the Banks Sector in Jordan
This study contributes to analyze a very important sector in Jordan which is banking sector. This process will be revealed by analyzing the determinants of financial performance for the banksâ€™ sector in Jordan during the period 2012- 2016. Return on Assets (ROA) was an indicator to measure the financial performance as dependent variable. On the other side, the independent variables were represented by microeconomic variables and macroeconomic variables.
Â According to this study, microeconomic variables were liquidity quick ratio, cash and investments to total deposits, net credit facilities to total deposits, debt ratio, and profit margin. Â In addition to that, macroeconomic variables were Gross Domestic Product growth rate (GDP), inflation rate, and unemployment rate as a percentage of total labor force.
After conducting the statistical analysis, there was an impact of profit margin on return on assets at 1% significance level. The study inferred from that there were no impact of the rest of microeconomic variables and macroeconomic variables as well on the financial performance indicator. So, the study recommended banks sector in Jordan to focus and analyze the profit margin beside to analyze the changes in other independent indicators to improve the financial performance for banks sector in Jordan. Â Â Â
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