The Impact of Macroeconomic Variables and Banks Characteristics on Jordanian Islamic Banks Profitability: Empirical Evidence

  • Al-Qudah A
  • Jaradat M
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Abstract

The aim of this study is to determine the effect of macroeconomic Variables (external variables) and bank characteristic (internal variables) on the profitability of Jordanian Islamic banks for the period (2000–2011).the study used panel data analysis fixed effects model and the generalized least square method to examine the study hypotheses. The empirical analysis shows that capital adequacy, bank size have a positive and significant impact on return on assets (ROA) and return on equity (ROE). While leverage measured by total deposit to total assets has a negative and significant impact on (ROA) and (ROE). The liquidity has an inersary insignificant effect on (ROA) and negative significant impact on (ROE). The study found that macroeconomic factors represented by Amman stock exchange index, construction licensed square meters and money supply growth are good determinants for Islamic banks profitability.

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Al-Qudah, A. M., & Jaradat, M. A. (2013). The Impact of Macroeconomic Variables and Banks Characteristics on Jordanian Islamic Banks Profitability: Empirical Evidence. International Business Research, 6(10). https://doi.org/10.5539/ibr.v6n10p153

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