The Impact of Change in Owned Capital and Deposits on the Performance of Banks: An Empirical Study on the Commercial Banking Sector in Jordan

Abstract

This study examines the effects of change in Owned Capital and deposits on performance of Jordanian banks. The study extends empirical work on owned capital of banks within country over the period of twelve years from 2000-2011 by utilizing data of banks listed at Amman Stock Exchange. Multiple regression models are applied to estimate the relationship between owned capital as well as deposits and banking performance. Three performance measures (including return on assets, return on equity, and net income) are used as dependent variable, while owned capital and deposits are used as independent variable. The results indicate that all the performance indicators such as Returns on Assets (ROA), Return on Equity (ROE) and Net Income (NI) are significantly and positively associated with owned capital. Moreover, there is no significant relationship between ROA and deposits. Altogether our study provides evidence that indicates bank performance is positively related to owned capital and deposits.