Bank Specific Determinants of Profitability in Jordan

Abstract

The performance of Jordanian banks for the past several years has remained a prominent focus of study. This study seeks to explore the effect of bank-specific determinants (bank capital structure, bank size and liquidity) on banks’ profitability in Jordan. Fixed effect regression model was employed on a panel data derived from the financial statements of 14 banks from 1999 to 2013.  The outcomes clarify a significant part of the variation in bank profitability and there is an indication that the capital structure of the bank, the bank size, as well as liquidity, contribute to banks’ profitability; These results are suggestive of the fact that banks can improve their profitability through controlling of the bank size and capital structure, further reducing the level of liquidity. Thus, government measurements and policies in the banking system must provide the enabling circumstances that will expedite growth.