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Jordan Banks Financial Soundness Indicators

Author

Listed:
  • Imad Kutum

    (The University of Jordan, Accounting Department)

  • Khaled Al-Jaberi

    (Independent Researcher)

Abstract

The aim of this research paper is to examine the Jordanian banks using financial soundness indicators. This is to establish if Jordanian banks were affected because of the 2007/2008 financial crisis and determine the underlying reasons. The research paper was conducted on 25 banks in Jordan listed in the countries securities exchange. The research methodology used consisted of examining the banks financial records in order to derive four crucial Basel III ratio such as the capital adequacy ratio, the leverage ratio, the liquidity ratio and finally the Total Provisions (As % Of Non-Performing Loans) %. The results revealed that out of the four hypotheses under examination Jordan Banks do not meet Basel financial Indicators for Capital Adequacy Ratio, Jordan Banks does not meet Basel financial Indicators for Liquidity Ratio , Jordan Banks do not meet Basel financial Indicators for Leverage Ratio and Jordan Banks do not meet Basel financial Indicators for Total Provisions (As % Of Non-Performing Loans) ratio. Only one hypothesis was accepted based on the research outcomes. The rest of the hypothesis was rejected since the average trend line did not go below the Basel III required ratio level. The general outcome of the research revealed that Jordanian banks were not affected significantly by the financial crisis.

Suggested Citation

  • Imad Kutum & Khaled Al-Jaberi, 2015. "Jordan Banks Financial Soundness Indicators," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 4(3), pages 44-56, July.
    • Handle: RePEc:rbs:ijfbss:v:4:y:2015:i:3:p:44-56
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    References listed on IDEAS

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    1. Sun Eae Chun & Hoon Kim & Wonhong Ko, 2012. "The Impact of Strengthened Basel III Banking Regulation on Lending Spreads: Comparisons across Countries and Business Models," Working Papers 2012-15, Economic Research Institute, Bank of Korea.
    2. Allen, William A. & Wood, Geoffrey, 2006. "Defining and achieving financial stability," Journal of Financial Stability, Elsevier, vol. 2(2), pages 152-172, June.
    3. Jeremy C. Stein, 2011. "Monetary Policy as Financial-Stability Regulation," NBER Working Papers 16883, National Bureau of Economic Research, Inc.
    4. Morten Bech & Todd Keister, 2012. "On the liquidity coverage ratio and monetary policy implementation," BIS Quarterly Review, Bank for International Settlements, December.
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    Cited by:

    1. Dr. Khaled Abdalla Moh'd AL-Tamimi* & Dr. Mohammad Sulieman Jaradat & Dr. Ashraf Mahammad Al-Rjoub, 2019. "The Role of Central Bank of Jordan in Economic Development," International Journal of Economics and Financial Research, Academic Research Publishing Group, vol. 5(10), pages 221-226, 10-2019.
    2. Salami Abdulai Agbaje & Uthman Ahmad Bukola & Sanni Mubaraq, 2021. "Bank-Specific Variables and Banks’ Financial Soundness: Empirical Evidence from Nigeria," Zagreb International Review of Economics and Business, Sciendo, vol. 24(1), pages 37-66.
    3. Apanisile Temitope Samuel, 2024. "The Effect of Quantitative Complexity Analysis on the Resilience of Nigerian Banks. Case Study: The Four Listed Nigerian Banks on the Premium Board of the Nigerian Exchange Group (NGX) for the Year 20," International Journal of Research and Scientific Innovation, International Journal of Research and Scientific Innovation (IJRSI), vol. 11(7), pages 17-71, July.

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