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

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.