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Jordanian Banking System: Analysis Of Technical Efficiency And Performance

Author

Listed:
  • TAHTAMOUNI, Abla S.

    (The Hashemite University, Department of Banking and Finance, Jordan.)

  • ALOMARI, Mohammad W.

    (The Hashemite University, Department of Economics, Jordan.)

  • BASHAYREH, Ala

    (The Hashemite University, Department of Economics, Jordan.)

  • ABDELHADI, Samer

    (The Hashemite University, Department of Economics, Jordan.)

Abstract

The purpose of this study is to examine the connection between technical efficiency and banks’ performance for 13 commercial banks in Jordan over the period 2010-2017. For this purpose, this study will employ the nonparametric model using the linear programming by Data Envelopment Analysis (DEA) to calculate technical efficiency and the panel regression analysis to estimate the relationship between technical efficiency and Banks’ performance measured by return on asset (ROA), return on equity (ROE) and Tobin’s Q. The empirical findings reveal that pure technical efficiency (PTE) is statistically significant with positive effect on ROA, ROE and Tobin’s Q. Further, the relative technical efficiency (RTE) or scale efficiency (SE) has positive significant impact on ROA, ROE, and Tobin’s Q. The market share and the ATMs coverage share also has a positive effect on bank’s performance. On the other hand, bank’s size has no significant effect on ROA and ROE but weak positive effect on Tobin’s Q.

Suggested Citation

  • TAHTAMOUNI, Abla S. & ALOMARI, Mohammad W. & BASHAYREH, Ala & ABDELHADI, Samer, 2020. "Jordanian Banking System: Analysis Of Technical Efficiency And Performance," Studii Financiare (Financial Studies), Centre of Financial and Monetary Research "Victor Slavescu", vol. 24(3), pages 23-40, September.
    • Handle: RePEc:vls:finstu:v:24:y:2020:i:3:p:23-40
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    References listed on IDEAS

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    Cited by:

    1. Nadeem Ahmad Bhat & Sandeep Kaur, 2024. "Technical Efficiency Analysis of Indian IT Industry: A Panel Data Stochastic Frontier Approach," Millennial Asia, , vol. 15(2), pages 327-348, June.

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    More about this item

    Keywords

    Technical Efficiency; Banks’ Performance; Commercial Banks; Data Envelopment Analysis Pages: 23-40;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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