Determinant of Banks Profitability: Evidence from Jordan, International Journal of Academic Research INTERNATIONAL JOURNAL Of ACADEMIC RESEARCH Vol. 3. No. 4. July, 2011, I Part
Authors : Dr. Imad, Z., Dr. Qais, K. & Dr. Thair, K., (2011), “Determinant of Banks Profitability: Evidence from Jordan, International Journal of Academic Research”, Vol. 3, No. 4, July 2011.
Abstract : In this study, a balanced panel data set of Jordanian banks was used for the purpose of investigating the nature of the relationship between the profitability of banks and the characteristics of internal and external factors. For this purpose, 100 observation of 10 banks over the period 2001-2010 were comprised. Two measures of bank’s profitability have been utilized: the rate of return on assets (ROA) and the rate of return on equity (ROE). Results showed that the Jordanian bank’s characteristics explain a significant part of the variation in bank profitability. High Jordanian bank profitability tends to be associated with well-capitalized banks, high lending activities, low credit risk, and the efficiency of cost management. Results also showed that the estimated effect of size did not support the significant scale economies for Jordanian banks. Finally, the estimation results indicated that individual effects on the profitability are present; this is concluded due to the fact that some of the differential slope coefficients are statistically significant.
Keywords : Bank profitability; panel data; Jordan
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Institutional Preferences: Evidence from the Jordanian Stock Market”, International Journal of Economic and Finance
Authors : Dr. Asmaa, A., Dr Qais, K. and Dr. Thair, K., (2011), “Institutional Preferences: Evidence from the Jordanian Stock Market”, International Journal of Economic and Finance, Vol. 3, No. 5, Oct. 2011.
Abstract : This paper provides evidence that institutional investors show preferences for large capitalization stocks, with good financial performance, high degree of leverage, low trade frequency, low annual return, and low price to book value ratio. Dividend Yield and stock volatility as measured by the standard deviations of daily prices do not seem to play an important role in institutional choice. The prudent man rule and fiduciary responsibilities of institutional managers might be good reasons to explain our findings. Keywords:
Keywords : Jordanian Stock Market, Institutional ownership and preferences
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Profitability and Working Capital Management the Jordanian Case, International Journal of Economics and Finance Canadian Center of Science and Education.
Authors : Dr. Thair, K. & Dr. Imad, Z., (2012), Profitability and Working Capital Management the Jordanian Case, International Journal of Economics and Finance Canadian Center of Science and Education. Vol 4, No. 4, April, 2012.
Abstract : This paper aims to assess the effect of working capital management (WCM) on the performance. Utilizing unbalanced data for a sample of 49 Jordanian Industrial corporations listed at Amman Stock Exchange - 2005 to 2009. Using two alternative measures of profitability as proxy for the performance and five proxies for the Working Capital Management, estimation of twenty models panel data cross-sectional time series have been tested employing two regression models; the Fixed-Effects Model and the Ordinary Least Squares Model. The findings of our study found to be significantly consistent with the view of the traditional working capital theory. The results suggest that working capital management and performance are positively correlated. The regression results also concluded that the Jordanian industrial firms follow a conservative investing policy and less aggressive financing policy in the working capital, and a well-efficient managing of the working capital can add value to the shareholders wealth.
Keywords : Profitability, Working Capital, Efficient management, Jordan
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Impact of capital expenditure on company’s` financial performance – A study on the industrial sector companies listed in Amman Stock Exchange for the period (2003-2012),
Authors : Kaddumi, Thair, (2013), Impact of capital expenditure on company’s` financial performance – A study on the industrial sector companies listed in Amman Stock Exchange for the period (2003-2012), Accepted on 5/11/2014.
Abstract : This study aimed at identifying the magnitude of Capital Expenditure (CAPEX) on company’s` financial performance. The study addressed the CAPEX value (independent variable) on a series of performance indicators such as:(Return on Assets (ROA), Return on Equity (ROE), Earning Per Share (EPS), Stock Market Value (SMV), Cash Flow Per Stock (SCF), Stock Turnover and Non- Current Assets Turnover. The study was conducted on a sample of 50 industrial companies listed in Amman Stock Exchange for the period (2003 – 2012), in order to determine the impact of the capital expenditure value on each one of the financial indicators separately using simple regression analysis and multi regression analysis, taking into consideration company`s size as control variable. The study concluded a number of results, which most important was that there was a strong impact of capital expenditure on each of ROA, EPS, SMV, SCF and non-current assets turnover and this is statistically significant (Sig-t.) less than 5%. These were also the same results relying on company`s size as control variable. The study recommended the necessity for considering CAPEX as an indicator to invest in company’s` shares and to boost their ability in generating liquidity via increasing operational cash flow volume, additionally to encourage company’s` managements to increase their CAPEX due to its positive effect on companies’ financial performance
Keywords : CAPEX, Financial, ASE, Performance, Impact
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Impact of Assets quality management on profitability and shareholders’ Value – The case of Jordanian Listed Commercial Banks (2001 – 2012).
Authors : Kaddumi, Thair, (2014). Impact of Assets quality management on profitability and shareholders’ Value – The case of Jordanian Listed Commercial Banks (2001 – 2012). American Academic & Scholarly Research Journal, Vol. 7, No.1.pp: 12-19.
Abstract : Solidity of the country's economy depends mainly on the strength of the financial system. (Beck and Levine, 2004), argued that healthy banking sector has a positive influence on economic growth. Being the core of any financial system, banking sector plays an essence role in its stability in recent days. The analysis of the type of assets that banks hold and its quality, is due to the significant importance on the overall performance and the financial results of the bank, IMF (2011) assets quality demonstrate a threat to banking sector stability. This study will investigate and assess the impact of total credit to total assets and total investment to total assets as a proxy for assets quality (independent variables) on the bank’s performances represented by EPS, ROA, ROE and Book value per share (Dependent variable). Applying multi and simple regression analysis, the most significant result was that banks assets quality
Keywords : Assets Quality, Impact, Management, Profitability, Value
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Relevance of Income Components and Firms Value – Empirical Study on Listed Industrial Companies (2003-2012).
Authors : Kaddumi, Thair (2014), Relevance of Income Components and Firms Value – Empirical Study on Listed Industrial Companies (2003-2012). American Academic & Scholarly Research Journal, Vol. 7, No.1. pp: 29 -35.
Abstract : This paper investigates into the implications of financial information included in financial statements in relation to value relevance and to explain reasons behind fluctuation in stock market value. Based on a sample of 50 industrial listed companies in Amman Stock Exchange – ASE, and by running regression statistical analysis, the study concluded that independent variables (EPS, BV, GP) collectively have a significant positive impact on SMP ( R2 = 63.6%), moreover OCF as independent variable also has a positive impact on SMP ( R2 = 21.9% ; Sig = 0.000), which means that income components affect positively and enhance the firms` value positively. This indicates the importance of accounting information as a denotation for investment decision in stocks.
Keywords : Relevance, Components, Stock, Firm Value, Income, Financial Information
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Cyclicality of Lending Behavior by Banking Sector for the period (2000-2013) – Evidence from Jordan.
Authors : Kilani, Qais & Kaddumi, Thair, (2015). Cyclicality of Lending Behavior by Banking Sector for the period (2000-2013) – Evidence from Jordan. International Journal of Economics and Finance, Vol. 7, No. 4, April, 2015.
Abstract : All economic sectors and individuals in Jordan rely mainly on banks to cover their shortage in money, thus banking sector plays a vital role in enhancing investments and economic development by standing in the middle between deficit units and surplus units. The major goal of this study is to identify what are the main drivers that impact lending behavior in Jordan. Using panel data and applying multi regression analysis on (13) Jordanian Conventional banks and two Islamic banks for the period (2000-2013) that are covered in this research, we found that lending behavior is statistically significantly affected by internal factors (DV, IR and net profit after tax) and it is also affected significantly by external factor (RR, GDP, IFR, OWDR and Red. R). Also the analysis indicated that OWDR and Red. R as a proxy for monetary policy did have a negative impact on lending behavior but not significantly proven. The study also reached to a conclusion that the amount of loans and advances extended by Jordanian banks is not affected by rate of interest. We recommend that Jordanian banks’ management should take into consideration internal specific factors as well as external specific factor with more care while formulating their lending policy, moreover central bank in cooperation with the Jordanian banking sector should work in more productive relationship in order to enhance more the economic growth.
Keywords : lending behavior, monetary policy, banking sector, central bank
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Apropos of Accounting Information indicators as determinants of cash dividend policy decision – A comparative study on Amman Stock Exchange (2001-2013). Evidence from Jordan.
Authors : Kaddumi, Thair & Kilani, Qais (2015). Apropos of Accounting Information indicators as determinants of cash dividend policy decision – A comparative study on Amman Stock Exchange (2001-2013). Evidence from Jordan. International Journal of Economics and Finance, 7(4), pp 135-143.
Abstract : Investor’s psychological behavior normally seek to invest in companies that are characterized by stable and positive dividend stream. Dividend policy is related to the decision of whether to distribute or not to distribute cash to shareholder. This type of decision is not taken in isolation from other related financial factors, as such decision is considered an integrated part of the company’s overall financial decisions. This study aims at investigating the apropos of accounting information indicators (financial indicators) and their role in determining cash dividend policy adopted by companies listed within the major sectors of Amman Stock exchange. Extracting the accounting information indicators pertaining to the three main sectors (Banking, Industrial and Services) of ASE, and by applying the simple linear regression statistical approach, the results indicated that the dividend policy adopted by the three sectors were mainly determined by accounting information indicators and that the impact of these indicators on cash dividend policy vary due to dissimilarity of the sectors’ nature, whereas the results pointed out that different indicator affect different sector, which means that the impact of the accounting information is not identical on cash dividend policy decision
Keywords : dividend policy, indicators, sectors, accounting information, ASE
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Co-linearity between Macroeconomic Drivers and Amman Stock Exchange Index- – Empirical Study for the Period (2005- 2013).
Authors : Kilani, Qais & Kaddumi, Thair (2015). Co-linearity between Macroeconomic Drivers and Amman Stock Exchange Index- – Empirical Study for the Period (2005- 2013). International Journal of Academic Research in Business and Social Sciences. 5(2), pp 145-158.
Abstract : Index value is mainly reflected by stock prices related to companies listed in the market, as stock market index fluctuate in accordance to the change of stocks` prices pertaining to the index. Index is affected by domestic economic events as well as international effect. This study is an attempt to search into macroeconomic factors that are correlated with ASE index track. The major conclusions of the study imply that, macroeconomic variables do collectively own a high degree of positive and significant correlation with ASE index. But, by employing single regression, we found that inflation rate and rediscount rate are positively correlated with the index, while money supply. GDP, interest on loans and red are negatively and significantly associated with the changes in ASE index and the only two variables that showed no significant correlation with the market index were the industrial production and interest rate on deposit.
Keywords : ASE, Financial Crisis, Market Index, Co-linearity, Macroeconomics, Stocks.
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Correlation and Impact of Sector Specific Index on Stock Market Index – The case of Amman Stock Exchange 2004 – 2015.
Authors : Kaddumi, Thair (2016). Correlation and Impact of Sector Specific Index on Stock Market Index – The case of Amman Stock Exchange 2004 – 2015, European Journal of Scientific Research, 137(2): 174 – 181.
Abstract : Conceiving the origins of stock market fluctuation has been a topic of considerable interest long ago to both policy makers as well as market practitioners. In both cases, forecasting stock market fluctuation is considered an immense challenge but also a principal instrument to manage the risks confronted by these parties. Investment decision is based on various factors and criteria that should be interpreted and analyzed before adopting any investment decision whether to buy or sale the specifies securities or may your decision is to hold the security concerned. In this study, we are going to study sector specific index (Financial, Industrial and Services) which bear a major correlation and impact on Amman Stock Exchange Index-Aggregate index (ASE-Index). The study, will attempt to assist and direct investors in building-up their portfolio based on the degree of correlation and impact of sector specific index and the
Keywords : Conceiving the Origin, Stock Market, Considerable Interest, Portfolio, Immense, Risk
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Soundness of Jordanian Banks – CAMEL Approach.
Authors : Kaddumi, Thair (2017). Soundness of Jordanian Banks – CAMEL Approach. International Journal of Economic Research – 14 (10): 119 – 127.
Abstract : Banks that form the major component of any financial sector are considered as the back-bone of the country economy, so it’s necessary to preserve the financial health of country ‘s banking system, and due to industry globalization its very essential for all companies including banks to be in business (Mat-Nor, at el. 2006). Thus the evaluation of the banking system financial soundness is essential to investigate into the soundness of the economic activities. In this paper we are going to adopt the CAMEL system analysis to evaluate the financial soundness of Jordanian commercial banks. The study sample will consist of all banks listed in Amman Stock Exchange –ASE (15 Banks). The finding indicates that all Jordanian banks performance is within the acceptable norms, despite of the difference in indicator values of CAMEL approach, as the statistical analysis pointed out that there is no significant difference in the performance of Jordanian banks.
Keywords : CAMEL, Banking Sector, Indicators, Performance, Ranking
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Financial analysis and investment decision - Empirical study on the Jordanian stock market 2011-2015.
Authors : Kaddumi, Thair (2017). Financial analysis and investment decision - Empirical study on the Jordanian stock market 2011-2015. International Journal of Economic Research - 14(15): 249-255
Abstract : Nevertheless, of many factors such as –economic, political, social and market condition, still financial analysis is considered as one of the main instruments that is employed by different investors categories to assist in rationalizing investment decision making. This study focused on the impact of different ratio categories on investment decision making, the study was conducted on industrial listed companies in Amman Stock Exchange. The most significant finding s of the study that, profitability indicators showed a positive significant impact on investment decision at 5% level, while credit and assets utilization indicators exposed a negative significant impact on investment decision at 10% level, while other indicators have no impact on investment decision.
Keywords : Ratios, Indicators, Multiplier, decision, Profitability
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Balanced Score Card Implementation and its Effect on Banks` Financial Performance.
Authors : Al-Gamazi, R., Z., and Kaddumi, A., T. (2020). Balanced Score Card Implementation and its Effect on Banks` Financial Performance. International Journal of Innovation, Creativity and Change, Vol. 13, Iss. 10, Pp 654-673.
Abstract : This study aimed at identifying the impact of balanced scorecard and BSC application of its four perspectives as independent variable (financial (Fin), customer (C), internal processes (IP), and growth and development (GD)) on financial performance measured by average stock market price of listed commercial banks, on the Amman Stock Exchange – ASE. A questionnaire was distributed to key persons such as managers, departments` heads. Of these, 312 questionnaires were valid for analysis. The study findings demonstrated that there is a statistically significant impact of the BSC of the four perspectives (FIN., C., IP. and GD) together or separately on banks financial performance. The study concluded that commercial banks management should adopt and apply BSC due its favorable impact on banks` financial performance and the focus more on client’s changing needs.
Keywords : BSC, Financial Performance, Stock Market value, Perspectives
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The Effect of Liquidity Risk Management on the Jordanian Financial Sector – The Proxy of Commercial Banks.
Authors : Kaddumi, T., and Al-Kilani, Q., (2020). The Effect of Liquidity Risk Management on the Jordanian Financial Sector – The Proxy of Commercial Banks. International Journal of Innovation, Creativity and Change. Vol. 14, Iss. 1, Pp: 240-253.
Abstract : The purpose of this paper is to determine the effect of Liquidity Risk Management on the Jordanian Financial Sector, as the success of any financial institution depends mainly on how it forecasts its liquidity needs and that might be through the structure of deposits or the surplus amount that determines performance will be at stake. To analyze this effect, liquidity and performance indicators of 13 listed Jordanian commercial banks were calculated and analyzed. Results elucidated that loans to total deposit (L2) portrayed a high adverse impact on operating cash flow per share (OCFS) (-2.535) and no effect on earnings per share (EPS). Quick ratio (L1) was able to explain a positive change in banking sector performance indicators, as results indicated 0.543 on EPS and 2.193 on OCFS. Cash and investments to total deposits ratio displayed a positive impact on both performance indicators with a varying degree of impact (0.212 on EPS and 1.734 on OCFS). Regarding loans to total assets indicator, contemplated a negative low impact on EPS (-0.085) and high negative impact on OCFS (-1.569). As a conclusion, the impact of liquidity risk management indicators was higher on OCFS than on EPS, thus cash basis performance indicators are more relevant than accrual basis indicator to be employed for liquidity risk management strategy
Keywords : Liquidity, Performance, Indicators, Accrual, Risk.
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Banking Soundness-Financial Stability Nexus: Empirical Evidence from Jordan. Banks and Bank Systems
Authors : Almahadin, H. A., Kaddumi, T., and AL-Kilani, Q. (2020). Banking Soundness-Financial Stability Nexus: Empirical Evidence from Jordan. Banks and Bank Systems, 15(3): 218-227.
Abstract : The main purpose of this study is to investigate the relationship between financial stability and banking soundness in Jordan. For this purpose, the study mainly uses the FMOLS approach in addition to other analysis techniques and tools. The outcomes of the descriptive analysis show that the Jordanian financial system seems stable, and the indicators of banking soundness signal a steady and solid banking sector. The empirical results reveal that the majority of the banking soundness indicators have a positive impact on financial stability. This asserts that a sound banking sector plays a vital role in maintaining a stable financial system. However, the findings also indicate that a steady interest rate policy is one of the significant requirements for sustaining the stability of financial systems. Moreover, the response of financial stability with respect to economic growth changes is found to be positive and relatively high. On the fact of the importance of the topic under study, since financial stability is one of the major concerns of the authority bodies, the empirical findings can have very important policy implications for decision-makers.
Keywords : Financial Stability, Banking Soundness, FMOLS Approach, Cointegration Tests, Jordan
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Measuring risk exposure in the banking sectors: evidence from Gulf Cooperation countries. Journal of Financial Economic Policy.
Authors : Anwar S Al-Gasaymeh, Thair A Kaddumi, Ghazi M Qasaimeh (2021). Measuring risk exposure in the banking sectors: evidence from Gulf Cooperation countries. Journal of Financial Economic Policy. ISSN: 1757-6385.
Abstract : Using capital asset pricing model (CAPM) and the Z-risk index based on weekly data, this study aims to estimate yearly unsystematic, total, three systematic and insolvency risks in the Gulf Cooperation Council (GCC) countries for the period 2010–2018. The findings of CAPM show positive systematic market risk exposure in all GCC countries for all years, which support the contribution of stock markets to bank prices and returns. The mixed signs of systematic interest rate and exchange rate risks in GCC countries provide hedging opportunities, diversification strategies and regional cooperation, which help risk managers to hedge and stabilize their portfolios against interest rate and exchange rate fluctuations. Therefore, it is necessary that managers and policymakers develop a monitoring system on factors affecting bank insolvency risks to avoid bankruptcies and insolvencies.
Keywords : Risk exposure, Z-risk index, CAPM, GCC banks, Asset pricing
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The Effect of Systematic Risks on Companies` Financial Performance – Empirical Approach. International Journal of Entrepreneurship.
Authors : Al-quraan, R. and Kaddumi, T. (2021). The Effect of Systematic Risks on Companies` Financial Performance – Empirical Approach. International Journal of Entrepreneurship. Volume 25, Special Issue 2. Online ISSN: 1939-4675
Abstract : Different economic sectors in the country are exposed to many risks that may reflect a negative impact and threaten their financial performance, thus their existence and sustainability. This study aims at investigating the impact of systematic risks on Jordanian industrial companies’ financial performance during the period of (1999-2018) listed at Amman Stock Exchange (ASE). The study employed multi regression analysis to analyze the research data. The analysis results concluded that there is significant and positive impact of all the study systematic risks variables on the dependent variable Return on Equity (ROE) and there is a positive impact of inflation rate and interest rate on cash flow per share (CSF). Additionally, the analyses results indicate that, there is significantly positive impact of companies’ size on the impact of interest rates and cash flow per share, but the case was not the same regarding ROE as the moderating variable (company`s size) has adversely impacted the role of independent variables. The research concluded many recommendations of which, the necessity of strengthening the role and responsibility of management in taking precautionary measures to reduce the impact of risks on performance of companies, and to analyses such potential risks in order to mitigate them or eliminate its effect.
Keywords : Systematic, Risks, Performance, Industrial, Impact
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Factors Affecting Stock Market Index Volatility: Empirical Study.
Authors : Al-Rimawi, M. and Kaddumi, T. (2021). Factors Affecting Stock Market Index Volatility: Empirical Study. Journal of Governance and Regulation / Volume 10, Issue 3,169-176.
Abstract : How is stock market price volatility affected, and what is the nature of the impact that macroeconomic variables do on the stock market price direction? The main objective of this study is to investigate the impact of some selected macroeconomic variables (inflation rate (INR), interest rate (IR), economic growth rate (EGR), and foreign investment (FI)) on Amman Stock Exchange (ASE) fluctuation for the period 1999–2018. The information is based on the annual data published by industrial companies listed at ASE. The study adopted a descriptive-analytical approach, also simple and multiple linear regression analysis was employed for the mentioned purpose (Nurfadilah & Samidi, 2017). The results revealed that there is no statistically significant impact of INR, IR, EGR, and FI collectively on ASE performance (Niewińska, 2020). Individually, the results indicated that there is a statistically significant impact of all variables (INR, IR, EGR, and FI) on ASE performance. Additionally, the results concluded that foreign investment, portrayed the highest impact factor on ASE performance, followed by a change in average interest rate, then inflation rate, and the least impact attributes to the economic growth rate. Finally, the research recommends that Jordanian banks should reduce the lending interest rate to enhance investment in securities and improve economic growth rate, also Jordanian authorities should encourage foreign direct and indirect investment and make more efforts to attract more foreign investment, either in the form of tax incentives or by extending finance at low-interest rates.
Keywords : Inflation, Interest, Economic Growth, Foreign Investment, ASE Performance
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Financial and Economical Determinants of Indirect Investment.
Authors : Daoud, R. and Kaddumi, T. (2021). Financial and Economical Determinants of Indirect Investment. International Journal of Entrepreneurship. Volume 25, Special Issue 4. Online ISSN: 1939-4675
Abstract : The study aims at identifying the most important financial and economic determinants of indirect investment at Amman Stock Exchange-ASE during 2003-2017. The study adopted descriptive and analytical approach in conducting the research and testing hypotheses by employing secondary sources that include the literature related to the subject of the study. The study community consisted of indirect investments (Stock) at ASE while industrial and services sectors were selected as the study sample due to these sectors contributions in the Jordanian economy. The study concluded the absence of any statistical impact of the economic and financial indicators on the annual growth rate of indirect investments volume in the industrial sector while economic indicators has a statistically significant effect on the annual growth rate of Indirect investments within the services sector, where rate of economic growth and stock multiplier have reflected the highest impact on the annual in service sector. Based on the above results, the study recommends, decreasing interest rate and seeking to provide a suitable platform to encourage direct and indirect investment in the country, that ultimately will lead to overall economic development. More attention should be exercised toward increasing the country`s production capacity, that will improve the economic indicators trend.
Keywords : Determinants, Indicators, Economic Indicators, Indirect Investments, Amman Stock Exchange
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Expert Systems and Neural Networks and their Impact on the Relevance of Financial Information in the Jordanian Commercial Banks
Authors : Ghazi Qasaimeh, Anwar Al-Gasaymeh, Thair Kaddumi, Qais Kilani. (2022). Expert Systems and Neural Networks and their Impact on the Relevance of Financial Information in the Jordanian Commercial Banks
Abstract : The current study aims to discern the impact of expert systems and neural network on the Jordanian commercial banks. In achieving the objective, the study employed descriptive analytical approach and the population consisted of the 13 Jordanian commercial banks listed at Amman Stock Exchange-ASE. The primary data were obtained by using a questionnaire with 188 samples distributed to a group of accountants, internal auditors, and programmers, who constitute the study sample. The results unveiled that there is an impact of the application of expert systems and neural networks on the relevance of financial information in Jordanian commercial banks. It also revealed that there is a high level of relevance of financial information in Jordanian commercial banks. Accordingly, the study recommended the need for banks to keep pace with the progress and development taking place in connection to the process and environment of expertise systems by providing modern and developed devices to run various programs and expert systems. It also recommended that, Jordanian commercial banks need to rely more on advanced systems to operate neural network technology more efficiently.
Keywords : Expert Systems, Neural Networks, Relevance, Financial Information, Banks
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