Jordanian Banks Research Articles

Loan portfolio structure: the impact of foreign and Islamic banks

PurposeThis study aims to investigate the role of bank ownership (foreign versus domestic) and the type of service (Islamic versus conventional) on bank lending to large enterprises and small and medium enterprises (SMEs).Design/methodology/approachBased on previous literature, the study proposes that foreign banks lend more to large enterprises and less to SMEs than domestic banks do. It also proposes that Islamic banks lend more to SMEs than conventional banks do. It utilizes unique hand-collected data of Jordanian banks from 2007 to 2018 to carry out its investigation. It applies regression estimation methods and propensity score matching to test its hypotheses.FindingsConsistent with prior empirical evidence, the findings show that foreign banks lend significantly less (more) to SMEs (large enterprises) than their domestic counterparts. However, the findings indicate that Islamic banks lend significantly less to SMEs than their conventional counterparts. Further analysis shows that Islamic banks operating in Jordan are ultimately owned by foreign investors hence their incentives to adopt full features of Islamic financial instruments are confounded by their incentives to utilize transaction lending technologies which in turn attenuates the expected positive impact of Islamic banking services on SMEs finance.Originality/valueThis research provides novel evidence on the impact of Islamic banks on SMEs finance as the results suggest that the success of Islamic finance in bridging the gap of SMEs finance is conditional on embracing its full features.

Estimating the Indirect Effects of Monetary Policy on Inflation, the Output Gap and Foreign Reserves in Jordan Using the New Keynesian Model

This research aims to estimate the indirect effects of Jordanian monetary policy (interest rates on the one-night deposit window) on the following economic variables: inflation, output gap, and foreign reserves. New Keynesian Theory). The model (based on the new Keynesian model) includes four basic equations that explain the changes in the following variables: inflation rates, the output gap, interest rates, and the effective real exchange rate. To estimate the model’s parameters, quarterly data for the Jordanian economy from 2000 to 2019 were used, especially for the mentioned variables. The simultaneous equations methodology and the general differences method (GMM) were used to obtain consistent and unbiased estimated values for the parameters. The study found that the monetary policy followed by the Central Bank of Jordan effectively influences inflation and the output gap, but in a limited way, and its impact on foreign reserves covering the most famous imports was significant.

E-banking services and the satisfaction of customers in the Jordanian banks

PurposeThis study aims to discuss the main points in the dimensions of the quality of the electronic services to be considered in the future to adapt to future transactions and how to benefit from them.Design/methodology/approachThis study relies on the developments and to cope with them so that the banks and customers shift from dealing in the traditional way to the electronic method, which has become a cause of the gap in understanding customers for electronic banking use of the descriptive-analytical approach. A questionnaire was used as a source for collecting data and information about the study variables. It was distributed to three Jordanian banks, and the number of participants was 170. This study uses two primary sources for collecting data and information: secondary sources that relate to the theoretical aspect and preliminary sources related to the analytical aspect of the study subject.FindingsThe results showed that the impact of e-banking quality dimensions of the study (ease of use, time, confidentiality and security) was high, which required the bank to maintain its high levels and monitor them from time to time.Originality/valueThe value of this study comes from the following points: the relationship between the quality of electronic banking services and customer satisfaction; this study is one of the few field attempts in Jordan to assess the impact of the quality of electronic banking services on the satisfaction of customers in banks; this study provides new scientific results on the impact of the quality of electronic banking services on the satisfaction of customers in the Jordanian banks.

The Effects of Coronavirus on The Profitability of the Banks Operating in Jordan: An Empirical study

This paper investigates the impact of the COVID-19 pandemic on the profitability of the banking sector in Jordan, given the paucity of empirical research on the impact of the COVID 19 pandemic on profitability bank in the context of developing countries. To achieve the search objective, the study selects all Jordanian banks listed in Amman stock exchange during period from 2018 until the year of emergence of corona pandemic 2020 to cover the requirements of statistical and financial analysis. The results study show that the financial indicators extracted from the financial reports of Jordanian banks from 2018-2020 had a decline in value during the year 2020 which corresponds to the emergence of coronavirus pandemic which means that the first hypothesis is valid. Our analysis shows that net profit ant total revenue and provision for credit and return on equity affect significantly the profitability banks. The value of profitability banks at the Amman stock exchange amounts to 68.5 %, while the remaining of 31.5 % refers to other variables that were not included in the construction of the study model.
 Keyword: Profitability, Jordanian banks, coronavirus pandemic, financial reports, Amman stock exchange

Evaluating Financial Performance of Jordanian Bank Listed on Amman Stock Exchange for the Period (2016-2020)

This study aims to identify the level of financial performance of Jordanian banks listed on Amman stock exchange during the period (2016-2020), using the financial ratios approved in assessing the financial performance of banks, to determine their performance during the study phase. Concerning the purposes of achieving the objective of the study, five financial ratios are extracted from the financial reports of the banks of the research sample for each year of the study: return on assets, return on equity, total assets to equity right ratio (equity multiplier), net profit margin and utility assets. The study noted that the financial performance of the Jordanian bank group during the period of the study was fragile, due to the high debt ratio and the low rates of return for these banks, this reflects the negative impact of the Corona crisis on the Jordanian economy represented by the increase of the volume of either internal or external debt, and the decrease in the proportion of foreign investment flows.
 
 Received: 22 February 2022 / Accepted: 7 June 2022 / Published: 5 July 2022

The Impact of Corporate Governance on Financial Performance: A Comparative Study among Palestinian and Jordanian Banks

Corporate governance has gotten a lot of attention recently. In most of the world's countries, the companies are intending to increase the efficiency of their work and management, and hence their profits and success rates. This research aims at examining corporate governance's impact on financial performance. It also makes a comparison in the context of Jordan and Palestine. This study also focuses on the board of directors' characteristics in terms of board size, independence, meetings, qualifications, and gender diversity methods of internal governance. To assess the firm's performance, four indicators were employed: Return on Assets (ROA), Return on Equity (ROE), Earnings per Share (EPS), and Operating Cash Flow (OCF). The researchers' views varied to classify the role of the board on financial performance, which represents a key element in corporate governance. This study is applied to the Jordanian banks on the Amman Stock Exchange in addition to the Palestinian banks on the Palestine Stock Exchange in the period 2012 to 2019. The SPSS software is used to perform the statistical analysis and check the research hypotheses using descriptive statistics, multicollinearity tests, and OLS regression. The results of the study show variations in board characteristics impact firm performance in the context of Jordan and Palestine. However, there are consistent results. As the regression found, the size of the board and gender diversity have a significant and negative impact on firm performance in the context of both Jordan and Palestine. The regression also found that board independence has a significant and positive impact on firm performance in the context of both Jordan and Palestine. The results of the study also show that there are differences in the governance structures applied in Jordan and Palestine. The findings show how the organization of the board affects the company's performance, which is considered useful information for policymakers.

HOW CAN BLOCKCHAIN REVOLUTIONIZE THE JORDANIAN BANKING SECTOR?

This article aims to explore blockchain, its applications, and its impact on banks in Jordan. The potential applications and improvements that blockchain might bring to the financial industry are astounding. Specifically, this study discussed the importance and possible areas of deploying blockchain technology in the banking sector of an emerging country with a fast-growing economy, namely Jordan, for different reasons. First, due to the shrinking interest-rate spread, Jordan's financial sector lacks long-term lending and unsecured loans. Second, many economic revolutions, such as the internet and banking innovations, have impacted the Jordanian banking sector. As a result, the banking sector must undergo significant transformation to increase performance and attain new levels of growth. Third, the underlying technology in clearing payment and credit bank information systems could be revolutionized by blockchains. Fourth, blockchain applications facilitate "obtain credit, unsecured loans" scenarios, improving banking efficiency. Finally, while blockchain has much appeal because it allows free and self-governing transfers, overall regulation and security for this decentralized system are still being created and agreed upon. We argue that for blockchain to change Jordan's financial system, legal frameworks must be in place to control banking transactions. This study explores the technology of blockchain, the emerging technology that powers Bitcoin and other cryptocurrencies. It highlights the features of the blockchain and shows why it could profoundly influence the entire banking sector in areas ranging from payments to settlements and identity services.

EVALUATING THE EFFICIENCY OF JORDANIAN COMMERCIAL BANKS BEFORE AND DURING THE COVID-19 PANDEMIC

The current research aims to investigate the financial management of Jordanian listed banks during the COVID-19 pandemic to identify the impact of the COVID-19 pandemic on the financial management efficiency of Jordanian banks during the pandemic. In addition, this research is based on a quantitative research approach as it incorporates financial management factors, including liquidity management, return on equity, return on assets, and financial performance, for identifying the efficiency of Jordanian banks during the COVID-19 pandemic. The analysis shows the financial indicators of banks listed on the Amman stock exchange. It has been found that the pandemic has affected the financial performance of these banks. On one side, although the total asset (size) of the banking sector is found to be increased on the other side, the debt ratio has also been increased, and it has created a significant negative impact on the financial performance. Hence, the findings indicate that the Jordanian government and the central bank of Jordan are still required to work on enhancing the financial performance of the financial sector in Jordan, as well as they should work on eliminating the impact of COVID-19 on the financial sector. Moreover, the reforms introduced by the Central bank of Jordan have a significant role in having this efficiency by the listed banks. This paper has highlighted that Jordan has a strong banking system that can cope with such uncertain situations due to its efficient financial management practices. The Jordanian government should further enhance the capabilities of the Jordanian banking sector through effective reforms to further contribute to the country's economic development.

Corporate Governance and Corporate Performance: The Case of Jordanian Banking Sector

Corporate Governance and Corporate Performance: The Case of Jordanian Banking Sector

THE IMPACT OF E-HRM PRACTICES ON JORDANIAN BANKS CUSTOMERS’ SATISFACTION

This paper aims to identify the impact of electronic human resource management practices represented as (e-compensation and e-payment) on Jordanian banks customers satisfaction. These two Practices are considered as they are widely practiced in the various banks in Jordan. The customers satisfaction with reference to the above e-hrm practices and their satisfaction in the Jordanian banking sector is studied in this paper. The study population consisted of all Jordanian banks customers. A questionnaire was drafted and mailed to the two hundred customers randomly selected from the list of customers dealing with those banks. One hundred twenty-seven of the two hundred customers properly filled and sent the questionnaires and this is the main data source for the current study. To achieve the objectives of the study, to investigate into any relationship between the customers satisfaction (demographic variable) and their reaction towards implementing the E-hrm practices in their banks the researcher used descriptive-analytical methods. The data was analyzed by employing Chi-square test at 5% level of significance using SPSS statistical software. The result showed that, the satisfaction of banks customers affects their perception towards implementing Electronic Human Resource Management in their banks. KEYWORDS: E-HRM, Customer satisfaction, E-payment, E-compensation.

Achieving Competitive Advantage (CA) Through the Role of Training and Compensations Practices on Innovative Work Behavior (IWB): A Study in Jordan Islamic Banks

Effective training and compensation system are important for modern industries that aim to gain Competitive Advantage (CA) which is one of the key factors for companies’ survival. A skilled workforce that reflec innovative work behavior (IWB) are an important element for companies to remain competition. This study aims to determine the relationship between training, direct compensation, and IWB, and then analyze the effect of IWB on CA with the moderating effect of indirect compensation. This study had been analyzed using quantitative approach and SEM technique to test the hypothesis through a data collected from 219 respondents working at 3 Islamic banks in Jordan using an adopted questionnaire. The results showed that training had a positive and significant impact on IWB, direct compensation had an insignificant impact on IWB, and IWB positively affected CA. In contrast, the moderating effect of indirect compensation on the relationship between IWB and CA was also confirmed. However, this effect has negatively influenced the positive effect of IWB on CA. Further research may propsed another HRM practices, and may do a comparative study between Islamic and conventional banks.

Investigating antecedents of mobile payment systems’ decision-making: a mediated model

PurposeThe increase in mobile telephone penetration has offered new opportunities for technology to improve payment operations all over the world. Little research has examined the issues related to the decision-making (DM) of mobile payment systems usage in the Jordanian context. The purpose of this study is to examine the factors that may have an influence on the adoption of mobile payment systems. This study has empirically tested the expanded unified theory of acceptance and use of technology (UTAUT2) together with awareness (AW), trust (TR), security (SE) and privacy (PR) as independent variables to explain the mobile payment system adoption in Jordan.Design/methodology/approachIn total, 270 employees participated in a field survey questionnaire from the public sector in Amman city, the capital city of Jordan. Data were analyzed through a quantitative approach of partial least squares–structural equation modeling.FindingsThe results mainly showed that the determinants of DM to use mobile payment system are price value, social influence, performance expectancy, AW and TR. All of these determinants explained 60.2% of the variation of DM. In total, 72.2% has been explained as the TR to use m-payment system by SE and PR. Furthermore, the results revealed that TR mediates the association between SE as well as PR and the DM to use mobile payment system.Originality/valueInterestingly, these new variables were found to be important and contribute to the UTAUT2 model. Consequently, the decision-makers in the Central Bank of Jordan should consider all these factors when re-upgrading a Jordan Mobile Payment system in the near future.

THE IMPACT OF ARTIFICIAL INTELLIGENCE ON THE EFFECTIVE APPLYING OF CYBER GOVERNANCE IN JORDANIAN COMMERCIAL BANKS

This study aims to examine the impact of artificial intelligence on the effective applying of cyber governance in Jordanian commercial banks. The objectives are divided into identifying the impact of expert systems on cyber governance in Jordanian commercial banks, identifying the impact of neural networks on cyber governance in Jordanian commercial banks, identifying the impact of genetic algorithms on cyber governance in Jordanian commercial banks, and identifying the impact of smart agents on governance cyber ​​in Jordanian commercial banks, The current study population includes (13) Jordanian commercial banks listed on the Amman Stock Exchange and the study sample includes all employees in the accounting departments, internal auditors, and programmers. The researchers distributed (208) questionnaires to the study sample members electronically, at a rate of (16) questionnaires in each bank and retrieved them in the same way. Then, 208 questionnaires were retrieved, including (7) questionnaires that are not valid for analysis, due to following the pattern method in answering all paragraphs, so that the researcher has (201) questionnaires valid for statistical analysis, This indicates the interdependence between artificial intelligence techniques and applications (expert systems, neural networks, genetic algorithms, and smart agents) on the effective application of cyber governance in Jordanian commercial banks, as these technologies and applications contribute to enhancing the effectiveness of cyber governance. Thus, it is necessary for commercial banks in Jordan to rely more on advanced systems, so that banks can use modern computer equipment and software, and thus increase the dependence of these banks on the effective application of cyber governance to follow up the progress of business and tasks in accordance with its strategies.

FINANCIAL PERFORMANCE RANKING OF ISLAMIC BANKS IN JORDAN EMPLOYING EDAS AND TOPSIS METHODS

This paper documents the findings of the financial performance ranking of Jordanian Islamic banks employing the similarity-to-ideal preference ranking technique Evaluation based on (TOPSIS) and Average Distance from Solution (EDAS) method. With the proposed approach we determine Criteria that affect the financial performance of the bank under consideration. The TOPSIS and EDAS methods are used to determine the significance weight of the criteria and the bank's performance score. The paper discovers that there are fluctuations in the EDAS and TOPSIS performance scores of analyzed Islamic banks in Jordan. This outcome demonstrates the performance instability of the considered banks. This consequence suggests that performance testing is meaningful in today's intensely competitive environment.

The moderating role of board diversity in the nexus between the quality of financial disclosure and dividends in Jordanian-listed banks

PurposeThis study covers all banks listed on the Amman Stock Exchange. It used (1) dividend-paying status, dividend changes and dividend persistence to measure dividend quality, (2) a checklist instrument consisting of 40 items to measure financial disclosure quality, (3) nationality and (4) the percentage of females and males on the board of directors to measure board diversity. Hierarchical regression analysis was employed to investigate the influence of the board diversity on the relationship between financial disclosure quality and dividend quality.Design/methodology/approachThis study investigates the relationship between financial disclosure quality and dividend quality among Jordanian-listed banks. Moreover, it examines the moderating effect of board diversity on the relationship between financial disclosure quality and dividend quality.FindingsThe results in this work imply that banks with high financial disclosure quality have high-quality dividends. Furthermore, nationality and females on the board of directors play a main role as moderators that influence managers' motivations toward the quality of financial disclosure practices and bank dividends. This paper shows that the boards in Jordanian banks have not changed dividend policies and tend to follow a long-term fixed strategy for paying earnings.Originality/valueBecause of the limited number of practical research on the nexus between financial disclosure quality and dividends quality, this study fills a gap in the literature by examining the relationship between them. In addition, a lack of research exists on the effects of board diversity on the nexus of financial disclosure quality and dividends quality. Therefore, this study makes an original contribution to the literature by using nationality and females and males on the board of directors as moderating variables to investigate the effects of board diversity on the relationship between financial disclosure quality and dividend quality among Jordanian banks.

The Impact of Customer Satisfaction on Loyalty in Jordanian Banks: The Mediating Role of Corporate Reputation

Customer satisfaction is a critical factor in improving bank performance and increasing revenue. Banks must continue to strengthen their relationships with customers because the banking system is highly responsive to customer choices. Customers are inundated with offers and services, particularly online, creating dissatisfaction with the status quo. The purpose of this research is to examine the mediating effect of corporate reputation on the relationship between customer satisfaction and loyalty in Jordanian commercial banks. A quantitative research design is used to achieve the research objectives. The data are gathered from the customers of Jordanian commercial banks in Amman. 350 valid questionnaires are used in the analysis. The findings of the study reveal that corporate reputation mediates the relationship between customer satisfaction and loyalty among bank customers. Therefore, the study recommends that banks make better use of their corporate reputation in their strategies, for instance in social initiatives and marketing programs, to ensure effective and sustainable engagement, which will improve the bank’s position in the minds of customers.

An empirical study on data warehouse systems effectiveness: the case of Jordanian banks in the business intelligence era

PurposeDespite the increasing role of the data warehouse as a supportive decision-making tool in today's business world, academic research for measuring its effectiveness has been lacking. This paucity of academic interest stimulated us to evaluate data warehousing effectiveness in the organizational context of Jordanian banks.Design/methodology/approachThis paper develops a theoretical model specific to the data warehouse system domain that builds on the DeLone and McLean model. The model is empirically tested by means of structural equation modelling applying the partial least squares approach and using data collected in a survey questionnaire from 127 respondents at Jordanian banks.FindingsEmpirical data analysis supported that data quality, system quality, user satisfaction, individual benefits and organizational benefits have made strong contributions to data warehousing effectiveness in our organizational data context.Practical implicationsThe results provide a better understanding of the data warehouse effectiveness and its importance in enabling the Jordanian banks to be competitive.Originality/valueThis study is indeed one of the first empirical attempts to measure data warehouse system effectiveness and the first of its kind in an emerging country such as Jordan.

The Effect of Fiscal Policy on the Economic Growth: An Analytical Study, Evidence from Jordan (2005-2020)

The Jordanian economy faces a set of economic challenges, represented by the rise in unemployment rates, the decline in the rates of gross domestic product, and the rise in the general level of prices, which are the most important indicators of economic development. Jordan is considered one of the developing countries with limited resources, and it depends greatly on tax revenues, grants, and foreign subsidies to cover public expenditures. Because of the importance of fiscal policy to correct the economic path, and Jordan's need for an effective fiscal policy to achieve acceptable economic growth and find successful solutions to address poverty, unemployment, declining investment, adjusting public spending levels, and setting tax rates, this study aimed to examine the impact of fiscal policy tools (Tax Revenue, Domestic Revenue, External Debt, Foreign Grants and Total expenditure), on indicators of economic growth in Jordan (GDP, Inflation, and Unemployment), during the period 2005-2020. The study followed the analytical and descriptive approach using statistical programs through a multiple regression model based on historical quarterly data obtained from the statistical database of the Central Bank of Jordan and the Jordanian Department of Statistics during the study period. The most important findings of the analytical results of the study's hypotheses are a statistically significant effect of fiscal policy tools on GDP, inflation, and unemployment with explanatory power (94%, 97%, and 86.6%). Consecutively. This study contributed to finding a model capable of explaining the impact of public financial policy tools on the most important indicators of development in Jordan, by taking into account most of the financial policy tools, so it is expected that the results of this study will contribute to improving the quality of fiscal policy decisions in Jordan.

THE IMPACT OF CORPORATE SOCIAL RESPONSIBILITY ON THE CUSTOMERS’ LOYALTY IN THE JORDANIAN BANKING SECTOR: THE MEDITATING ROLE OF CUSTOMER SATISFACTION

This study examines the impact of corporate social responsibility on customer loyalty in Jordanian commercial banks. The study aimed to examine the mediating role of customer satisfaction in the relationship between corporate social responsibility (ethical, philanthropic, and environmental) and customer loyalty. The descriptive-analytical method was used. Data were collected from customers of a Jordanian commercial bank in Amman. A total of 380 questionnaires were analyzed using smart PLS version 3.2.8. The relationship and mediation effects were investigated using partial least squares structural equation modeling (PLS-SEM). The research results indicated a significant impact of corporate social responsibility (CSR) on customer loyalty. Also, the result indicated that customer satisfaction mediated the relationship between the corporate social responsibility dimension (ethical responsibility, philanthropic responsibility, and environmental responsibility) and customer loyalty among the bank’s customers. Accordingly, the study recommends employing social initiatives in the bank with ethical and environmental responsibility because of their great resonance with customers to bridge the great competitive gap in the Jordanian banking sector. Furthermore, the current study supports the literary framework by examining the relationship between corporate social responsibility and customer loyalty. The novelty of this study establishes the context of highlighting the key dimensions of CSR that impact customer loyalty and satisfaction, thereby improving the performance of Jordanian banks. Finally, Jordanian banks may be able to increase their revenues and meet the organization’s objectives.

The Uniform Customs and Practices (UCP 600) and Letters of Credit: How do the Jordanian Bank's Compliance Practices ?

<p><em>The Uniform Custom and Practice (UCP 600), has defined letter of credit as: </em><em>“Any arrangement, however, named or described, that is irrevocable and thereby constitutes a definite undertaking of the Issuing Bank to honour a complying presentation.</em><em> </em><em>UCP 600 is subject to four main principles: Strict Compliance, Autonomy, Documents handling and virtue examination. This study aims to identify the fundamental principles governing letter of credit operation under the Jordanian Banks practice. Through a qualitative and doctrinal legal approach, this study analyses the organization of UCP 600 regarding the principle governing L/C and the extent to which Jordanian banks adhere to the principles of UCP 600. It also examines, via case approach the Jordanian court's approach towards this matter. The findings reveal that </em><em>the Jordanian banks (Conventional and Islamic) with 100% are fully committed to the UCP</em><em>. </em><em>Moreover, this study also has found that Although Jordanian legislators did not regulate letters of credit operations under the commercial law, it can be noticed, based on the commercial law, that the autonomy principle is applicable in Jordan, even if it is applied in a different context.</em><em></em></p>