Jordanian Banking Sector Research Articles

Drivers of E-Business Value Creation in Banking Sector in Jordan: A Structural Equation Modeling Application

With the development and growth of internet, its applications of e-banking, e-commerce, and e-business became irreplaceable channels regarding its fast access, rich content, and smooth interactivity. High investments are paid toward improving the quality of service offered by the banks. This paper is dedicated to empirically investigating the drivers of e-Business value creation in the Jordanian banking sector. This work summarizes the main differences among employees of Jordanian and foreign bank regarding their perspectives. Many of the competing foreign banks to the Jordanian banks are enforced with huge financial capital, having long periods of banking practices and are employing cutting-edge technologies and tools. To minimize the technological gap, Jordanian banks are working hard to develop their e-Business services. This in one hand has to enhance their trust, satisfaction, and commitment toward existing customers and entice new comers on other hand. Based on business model of Amit and Zott, i.e. the four constructs of eValue framework (efficiency, complementarities, lock-in, and novelty), four hypotheses have been formulated to test the differences in the drivers of e-Business value creation between Jordanian and foreign banks. A survey questionnaire in a form of paper-and-pencil was delivered personally to 200 employees from four main Jordanian banks and 200 employees from four foreign banks working in Jordan. The questionnaire was formed and constructed to test the proposed hypotheses. the findings in this study based on the SEM and T-test analyses, revealed important implications that will help banks’ managers to make well-informed decisions and policies regarding investments and resources allocation for implementing eBusiness strategies and ventures. The paper concludes with discussing the importance of these findings for practitioners and for future research on value accrued from e-Business services.

The Impact of Intellectual Capital on the Administrative Innovation among the Employees in the Commercial Jordanian Banks

Purpose: The study aims to investigate the effect of intellectual capital on the innovation among the administration staff in the commercial Jordanian banking sector. Design/Methodology/Approach: A simple sample was selected from administration staff in the commercial Jordanian banks during the study period, which consist (5%) from the overall study population. The questionnaire was the study tool to collect data. Findings: There is a significant impact of human capital on the innovation among the employees of Jordanian commercial banks. There is also a significant impact of structure capital on the innovation among the employees of Jordanian commercial banks and a significant impact of relational capital on the innovation among the employees of Jordanian commercial banks. Practical Implication: Findings can be used to enhance the employees’ administrative innovation in the commercial Jordanian banks by highlighting the significance of the intellectual capital and its role in motivating and promoting the employees’ work. Originality: The study is the authors’ work as a team and it is considered as a support to the significant effect of the intellectual capital on the innovation in the field of commercial banks.

The Impact of Fair Value Accounting on Information Asymmetry: Evidence from Jordanian Banking Sector

This study aims at examining the impact of Fair value accounting measured by other comprehensive income on information asymmetry measured by the bid-ask spread in the Jordanian banking sector between 2010 and 2017. The study sample consisted of the thirteen commercial banks listed in Amman Stock Exchange, and panel data analyses were employed to test the study hypothesis, data for the study was gathered through the annual financial reports disclosed on Amman Stock Exchange. The findings revealed that fair value has a negative and significant impact on information asymmetry in the Jordanian commercial banks, indicating that fair value accounting supplies stakeholders with accurate and appropriate data and reflects the informational value of fair value numbers to investors.

The Impact of Horizontal Mergers on the Performance of the Jordanian Banking Sector

This paper examines the impact of mergers on the financial performance of the Jordanian banking sector. This paper applies the financial approaches in analysing the effects of mergers on Jordanian banks' performance for two the periods: four years pre-merger and four years' post-merger for the period from 2001 to 2009. The sample of the study solely contains the case of the merger of the Jordan Ahli Bank (AHLI bank) with Philadelphia Bank in 2005. Data are tested for normality using the Shapiro-Wilk Test and Kolmogorov Smirnov test. The financial ratios and a statistical technique as a Mann-Whitney U test were used to assess the significant differences in the financial performance of the selected banks pre- and post-merger by investigating the performance-related financial ratio groups that are expressed by leverage, liquidity, efficiency, and cash flow ratio. The results show that there is an insignificant improvement in the ratios of AHLI bank in the period after the merger, except for the superior result provided by this study indicating that the leverage ratios improved significantly. The reason for the insignificant improvement in financial ratios may be that the post-merger period corresponds to the period of the global financial crisis that began in 2007.

The Reality of Financial Inclusion and its Challenges - Jordan and Algeria as an example

The aim of the study was to present the most important concepts about financial inclusion, its importance and the different ways to enhance it, as well as to identify the most important indicators, taking the example of the reality of financial inclusion in Algeria and Jordan and the most important challenges in the two countries.The study concluded that financial inclusion provides advanced financial services and products, and also plays an important role In mobilizing savings and developing the financial system in the developed countries in general and the developing ones in particular. Despite the strength and development of the financial banking sector in Jordan, there are over 70% of the eligible citizens in Jordan who do not deal with financial institutions despite the existence of an excellent infrastructure that enables citizens and Banks of movement and access to each others, either through traditional branches or through electronic branches. As for Algeria, the ownership of the accounts at the formal financial institutions have improved to an acceptable level, but borrowing from financial institutions is still very low.

Innovation and intellectual capital as intermediary variables among transformational leadership, transactional leadership, and organizational performance

PurposeThe purpose of this paper is to examine the mediating effect of intellectual capital and innovation on the relationship between transformational and transactional leadership and organizational performance in Jordanian banks located in Irbid city.Design/methodology/approachA questionnaire that targeted 350 respondents resulted in 298 usable ones with a response rate of 85.14 percent. To test the research hypotheses, a structural equation model was conducted, in addition to descriptive statistics that provided background on the respondents.FindingsThe findings indicate that transformational and transactional leadership relate positively to organizational performance. The results also support the argument that intellectual capital and innovation played mediating roles in transformational and transactional leadership and organizational performance.Practical implicationsThe present study provides managers with empirical proof that possessing strong intellectual capital in its three dimensions seems to help the banking sector in Jordan to reinforce their ability to generate both radical and incremental innovation. Also, applying an effective leadership style will motivate and lead to superior performance.Originality/valueAlthough papers have shown that leadership style is an important factor influencing employees' performance and outcomes, this is one of the few studies that investigates the interrelationships between leadership styles, intellectual capital, and innovation on organization performance. Furthermore, it is the first to test the model on the banking sector in Jordan.

FINANCIAL PERFORMANCE AS MEDIATOR ON THE IMPACT OF INVESTMENT AND FINANCIAL DECISIONS ON STOCK PRICE AND FUTURE PROFIT: THE CASE OF THE JORDANIAN FINANCIAL SECTOR

The current study investigates the effect of investment and financial decisions on stock prices and future profits in the presence of financial performance as an intermediate variable. Thus, the case of the Jordanian banking and insurance sector is analysed. The sample includes 13 banks and 10 insurance companies from 2009 to 2018. A structural equation modeling analysis is conducted using the AMOS 23 software to test the hypotheses and validate the model. Financial decision exhibits no effect on future profits and stock prices, whereas investment decision affects future profits and stock prices. Financial performance is considered a mediator in the effect between financing decision and future profits. By contrast, financial performance fails to mediate the impact of financial decision and stock prices. In addition, it cannot mediate the effect of investment decision on future profits and stock prices.

How can entrepreneurial marketing promote the entrepreneurship culture in an organization: case of banking sector in Jordan

The current study focuses on the entrepreneurial marketing. The study aims to examine how entrepreneurial marketing can act in defining and nurturing the entrepreneurship culture within the banking sector in Jordan in the period of 2018–2019. The chosen dimensions of entrepreneurial marketing include customer focus, opportunity driven, innovation, risk management, and proactiveness. Utilizing the quantitative approach, 368 questionnaires were distributed among marketing managers within the commercial banks in Jordan, including marketing managers, marketing officers, and e-marketing representatives. Descriptive statistics, multiple regression, and linear regression were used in order to analyze the results by using SPSS ver. 23. The study analysis indicates a positive influence of entrepreneurial marketing on organizational culture through nurturing the entrepreneurial spirit and motives. The study has also shown that proactiveness and risk management were the most influential variables as they scored R-value of 0.697 and 0.692, respectively, referring to these variables as highly influential, and play a significant role in nurturing the entrepreneurial culture within the organization.

Form the Optimal Investment Portfolio Applied Study in the Jordanian Banking Sector (2013-2017)

The study aimed to form the optimal investment portfolio in the Jordanian banking sector. The research covered a period (2013-2017) and the sample of the study was selected from its community of Jordanian banks listed on the Amman Stock Exchange, consisting of (15) working banks for which the necessary data are available to study.
 
 The importance of the research lies in the formation of a thought and methodology that can be applied and utilized by investors and securities analysts in the management of their investment portfolio.
 
 The study shows that the effective rate of return is higher than the required rate of return in the Jordanian commercial banks. This indicates that the commercial banks have succeeded in their estimates of the required or actual rate of return for the optimal investment portfolio banks. the correlation matrix between returns on each bank in the investment portfolio is mostly low, which confirms that the investment portfolio of Jordanian banks is efficient, as Markowitz stressed on his focus on the correlation coefficient between returns and its impact on the return and risk of the optimal investment portfolio that achieve the highest return at a certain level of risk.

Investigating the Quality of Banking Services: Evidence from Jordanian Commercial Banks

The main objective of this study is to measure the quality level of the Jordanian banking services, and to investigate the opinions of the beneficiaries from the quality of Jordanian banking services. However, the services of banks are characterized by their importance in various fields (i.e., economic, social, and civilization). This study is conducted in the Jordanian banking sector, because this sector has a key role in the Jordanian economy. In addition, the challenges are facing banking sector because of the openness, and the possibility of foreign banks entry and what consequent competition.

The effect of customer lifestyle patterns on the use of mobile banking applications in Jordan

In the last few years, a crucial business trend has been derived from the information systems (IS) discipline called 'mobile banking applications'. This trend has focused upon conducting financial banking services with the help of smart mobile devices, and now has attained great importance. This study aimed to highlight the importance of mobile banking applications within the banking sector in Jordan. Data were collected using a self-administrated questionnaire from 300 participants from three banks in Jordan. The results indicated that there were no statistically significant differences between the lifestyle patterns of mobile banking applications of users and non-users. However, the lifestyle patterns of users had some common themes; fashion consciousness, leadership traits, family concern, health consciousness, carefree, community conscious and practicality had significance impact on mobile applications users, but cost consciousness had no significance impact on the rate of usage of mobile banking applications by users. Based on the research findings, a number of recommendations are suggested.

Financial Inclusion Indicators and their Effect on Corporate Profitability

The main objective of this research is to figure out the effect of financial inclusion indicators on the profitability of firms looking specifically on the banking sector in Jordan. The researchers used the applied approach relying on data of financial inclusion indicators published by the Central Bank of Jordan, World Bank, and Jordanian commercial banks. A regression analysis is employed to examine the relationship between financial inclusion and bank profitability (Return on Assets). Findings of the study showed that there is a significant relationship between financial inclusion and firm profitability. The study recommends that Jordanian commercial banks should increase access to financial services through different channels and tools in order to increase financial inclusion in the Jordanian community.

Measuring Customers Satisfaction of Islamic Banking Sector in Jordan

This study measured the satisfaction of customers with the quality of Jordanian Islamic banking services. This study investigated the effect of customer satisfaction factors (quality of services, trust, and institutional image and the confidence of customers) in Islamic banks on their satisfaction with their services. The sample size consisted of 186 clients of Jordanian Islamic banks. The paper used simple and multiple linear regression methods. The major findings revealed that there is a positive significant impact of elements (services quality, customer confidence, and institutional image) in customer satisfaction with their services. The sample of this paper does not cover the total number of customers of Islamic banks in Jordan and did not take into account all the factors that affect the satisfaction of customers. In the future, it could be a more comprehensive study done in Arab countries. This result is highly relevant with immediate practical implications. This study is intended to help Jordanian Islamic banks' management develop their marketing strategies. This is important for the survival of this type of bank.

Environmental and Organisational Factors Affecting the Adoption of Enterprise Resource Planning Systems in the Jordanian Banking Sector

Environmental and Organisational Factors Affecting the Adoption of Enterprise Resource Planning Systems in the Jordanian Banking Sector

Investigating innovation capability and organizational performance in service firms

AbstractIn the service firm, innovation capability influences both financial and nonfinancial performance. It is crucial for businesses to address key challenges anticipated by the changes in socioeconomic and environmental issues. Innovation capability is largely seen as a vital source for generating sustainable competitive advantage. This article investigates the determinants of innovation capability and their relationship with organizational performance in the Jordanian banking sector.

The Impact of Prudential Regulation on Jordanian Banks Liquidity

Regulation of the financial sector is major aspect of consideration by the regulating authority, since financial sector highly influences the performance of the entire economy. The Global Financial Crises underlined the importance of liquidity management,when the credit crisis led to a liquidity crisis. Thus, Jordanian regulatory authorities are trying to achieve and maintain the financial stability by assessment of the banks’ financial condition and through regulations that ensure the stability and prevent failures that can occur under adverse circumstances. The study aim to analyze the impact of a prudential regulation on the Jordanian Banks liquidity. The specific objective in this case is; to determine whether the current prudential regulation enhance the banks liquidity in Jordan, or financial regulation still need additional updates. This study examines the impact of both Microprudential and Macroprudential regulation on Banks Liquidity Ratio, within the context of the Jordanian Banking Sector. To carry out the analysis, managed to collect the annual data for 12 listed during the period 2005-2018 with data arranged in the form of a panel, by using Random Effect Approach Regression, and compared the bank liquidity ratios during period before and after Global Financial Crisis (2008).The results indicate that Macroprudential tools have positive significant impact on Banks Liquidity Ratio, while micro is not. The main conclusions from this research indicate that while liquidity requirements tend to reduce liquidity risk, it appear to be more costly to comply with, reduced bank liquidity, and the banking sector still need additional Regulation updates to enhance banks Liquidity.

Impact of the Development of ICT Infrastructure and Security on the Effectiveness of Accounting Information in the Jordanian Banking Sector

Information and communication technology ICT infrastructure is an essential foundation of the information society characterized by modernization and advance. ICT infrastructure consists of main five elements including physical resources, human resources, software, databases and networks and communication. The study aims at identifying the impact of the development of ICT infrastructure, which includes physical and human resources, software, databases and networks and communications, on the effectiveness of accounting information systems. To achieve the purposes of the study, a researcher has used a descriptive research methodology; a questionnaire has been distributed to the employees at various management and accounting positions in the bank.
 
 The study found that the developments of ICT infrastructure, consisting of physical and human resources, software, databases and networks and communications, affects extremely the effectiveness and security of accounting information systems.

The Role of Internal Control in Raising Employee Productivity in Jordanian Bank

Internal control helps organizations achieve their objectives and maintain and improve their performance, and the performance of their employees. The Committee of Sponsoring Organizations of the Tread Way Commission issued an Internal Control — Integrated Framework, to help organizations in designing, implementing, and conducting internal control and assessing their internal control systems’ effectiveness, this Integrated Framework, included the five factors of control system, which are Control Environment, Risk Assessment, Control Activities, Information and Communication, and Monitoring Activities. The research examines the relationship between internal control system of an organization and employee engagement, and the effect that such has on the performance of the employee in the organization, and job satisfaction. This research primarily aims at finding out the impact of internal control system on employee performance in Jordanian companies, especially those in the Jordanian banking sector. Internal control systems will influence employees’ performance in two ways, through having an effective internal control system, or through not having an effective internal control system. The research therefore tends to evaluate the extent of adherence to internal control System in Jordanian banks, its impact on the performance of employees, and finally the recommendations of the researcher.

Parametric, Non-Parametric and Multivariate Analysis of Capital Structure During the Financial Crises in Jordanian Banks

Motivations: This research seeks to analyze the determinants of capital structure of the banking sector in Jordan taking into consideration bank business model (Islamic versus Commercial bank). The research also sheds light on the financial crises of 2007/2008 and its impact on the financing decision in the banking sector.Novelty: Although the topic of capital structure's determinants is well studied in non-financial firms, very few studies considered the financial firms, namely banks. Since the nature of operations and capital components for banks are totally different this research comes to fill the gap in the banking literature.Methodology and Methods: The study uses multivariate regression techniques of panel data besides the parametric and non-parametric analysis. Three measurements of capital structure are considered: leverage ratio, long term debt ratio and short-term debt ratio, the explanatory variables are included in two sets, bank specific characteristics and economic characteristics.Data and Empirical Analysis: Balanced panel data set was formed for 27 Jordanian banks during the period of 2003-2015. Empirically, the findings suggest a variation of capital structure determinants based on the variable of measurement. However, the analysis confirms that bank's profitability and bank's risk are major components of the capital structure decision regardless of its measurement variable. In addition to these two variables, liquidity, growth and taxes are important variable in the short-term debt financing, and retained earnings is important to the long-term financing. Empirically proven that Jordanian banks' capital structure decision is affected by the global financial crisis 2007/2008 and by bank type. Jordanian banks might differ in size, but this doesn't affect their policies toward the capital structure. The empirical results are consistent with the pecking order theory that profitable firms prefer to use more of their internal sources of funds rather than debt financing.Policy Implications: Due to the importance of the capital structure decision for banks and non-banks firms and based on our finding, the policy makers in Jordan and may in other similar countries should pay attention to capital requirement regulations as the determinants of leverage among banks are different based on the business model whether commercial or Islamic.

Corporate Social Responsibility Effective Determinants of the Banking Sector in Jordan

This study aimed at exploring the effective determinants of the Corporate Social Responsibility (CSR) of the Banking sector in Jordan . The researcher has adopted the qualitative research approach proposed by Strauss and Corbin (1990, 1998) on a sample of (20) bank employees involved in the corporate social responsibility in the Jordanian banks. As the three fundamental components this methodology should consolidate; which are: theoretical sensitive coding, that is, making hypothetical strong thoughts from the data to clear up the phenomenon examined; theoretical sampling, that is, picking whom to meet or what to see next as demonstrated by the state of the condition of hypothesis generation, and that implies starting data analysis with the first interview, and writing down memos and early hypotheses; and furthermore, the need to differentiate phenomena and settings to make the hypothesis legitimate. The researcher concluded that it was the phrase of “ Bank Profits ” as a probable key category that led to the validation of the perceived hypothesis. Key words : Corporate Social Responsibility; Effective Determinants; Banking Sector; Jordan. DOI : 10.7176/RJFA/10-9-06 Publication date :May 31 st 2019