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The Threats of Unsystematic Risks in Jordanian Commercial Banking Sector

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  • Ghaith N. Al-Eitan
  • Ismail Y. Yamin

Abstract

The objective of this study is to empirically examine the effect of unsystematic risks on the performance of commercial banks in Jordan, using panel data for the period of 10 years (2005-2015). The study uses earning per share and dividends as dependent variables to represent Banks¡¯ performance. The empirical analysis based on the fixed effect model selected on the basis of Hausman test. The results indicate that the impact of Non-performing loans on commercial banks¡¯ dividends is positive and significant while the impact of capital adequacy is negative and statistically significant on dividends. The results indicate that the credit risk, liquidity risk, non-performing loan and capital adequacy have significant effect on earnings per share and the effects are negative as expected. Based on the study it is recommended that the Jordanian commercial banks needs enhance the process of credit risk management to determine loan defaulter and impose the appropriate legal action against them.

Suggested Citation

  • Ghaith N. Al-Eitan & Ismail Y. Yamin, 2017. "The Threats of Unsystematic Risks in Jordanian Commercial Banking Sector," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 9(9), pages 175-181, September.
    • Handle: RePEc:ibn:ijefaa:v:9:y:2017:i:9:p:175-181
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    References listed on IDEAS

    as
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    4. Ciccarelli, Matteo & Maddaloni, Angela & Peydró, José-Luis, 2015. "Trusting the bankers: A new look at the credit channel of monetary policy," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 18(4), pages 979-1002.
    5. Alper, Deger & Anbar, Adem, 2011. "Bank Specific and Macroeconomic Determinants of Commercial Bank Profitability: Empirical Evidence from Turkey," Business and Economics Research Journal, Uludag University, Faculty of Economics and Administrative Sciences, vol. 2(2), pages 139-139, April.
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    More about this item

    Keywords

    earning per share; dividends; credit risk; liquidity risk; non-performing loan; capital adequacy;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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