Determinants of Banks’ Stability in Jordan
This paper aims to examine the determinants of financial stability in Jordanian commercial banks based on annual data for the period from 2011 to 2018. Based on the pooled effect model, this study shows that SME loans and capital adequacy positively and statistically affect the stability of Jordania...
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| Format: | Article |
| Language: | English |
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MDPI AG
2022-12-01
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| Series: | Economies |
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| Online Access: | https://www.mdpi.com/2227-7099/10/12/311 |
| _version_ | 1827640751865987072 |
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| author | Buthiena Kharabsheh Omar Khlaif Gharaibeh |
| author_facet | Buthiena Kharabsheh Omar Khlaif Gharaibeh |
| author_sort | Buthiena Kharabsheh |
| collection | DOAJ |
| description | This paper aims to examine the determinants of financial stability in Jordanian commercial banks based on annual data for the period from 2011 to 2018. Based on the pooled effect model, this study shows that SME loans and capital adequacy positively and statistically affect the stability of Jordanian commercial banks, while financial inclusion, liquidity risk and credit risk negatively and statistically affect the stability of Jordanian commercial banks. The study recommends increasing the directing of bank loans towards small and medium enterprises, and the necessity for bank managers to commit to capital adequacy requirements because of their positive impact on banks’ stability. This study recommends that banks experiencing financial stability accelerate the increase in the rate of financial inclusion because financial inclusion ratios are very low in most of these stable banks. On the other hand, Jordanian commercial banks that have relatively high rates of financial inclusion should reduce the operating expenses resulting from financial inclusion. Bank managers also have to maintain sufficient liquidity in their banks and enhance credit standards by increasing collateral requirement from customers. |
| first_indexed | 2024-03-09T17:04:00Z |
| format | Article |
| id | doaj.art-e86658ba072144de860f449f1f6fc66d |
| institution | Directory Open Access Journal |
| issn | 2227-7099 |
| language | English |
| last_indexed | 2024-03-09T17:04:00Z |
| publishDate | 2022-12-01 |
| publisher | MDPI AG |
| record_format | Article |
| series | Economies |
| spelling | doaj.art-e86658ba072144de860f449f1f6fc66d2023-11-24T14:26:39ZengMDPI AGEconomies2227-70992022-12-01101231110.3390/economies10120311Determinants of Banks’ Stability in JordanButhiena Kharabsheh0Omar Khlaif Gharaibeh1Faculty of Business, Yarmouk University, Irbid 21163, JordanSchool of Business, Al-alBayt University, Al-Mafraq 25113, JordanThis paper aims to examine the determinants of financial stability in Jordanian commercial banks based on annual data for the period from 2011 to 2018. Based on the pooled effect model, this study shows that SME loans and capital adequacy positively and statistically affect the stability of Jordanian commercial banks, while financial inclusion, liquidity risk and credit risk negatively and statistically affect the stability of Jordanian commercial banks. The study recommends increasing the directing of bank loans towards small and medium enterprises, and the necessity for bank managers to commit to capital adequacy requirements because of their positive impact on banks’ stability. This study recommends that banks experiencing financial stability accelerate the increase in the rate of financial inclusion because financial inclusion ratios are very low in most of these stable banks. On the other hand, Jordanian commercial banks that have relatively high rates of financial inclusion should reduce the operating expenses resulting from financial inclusion. Bank managers also have to maintain sufficient liquidity in their banks and enhance credit standards by increasing collateral requirement from customers.https://www.mdpi.com/2227-7099/10/12/311stabilityinclusionSMEscapital adequacyrisk |
| spellingShingle | Buthiena Kharabsheh Omar Khlaif Gharaibeh Determinants of Banks’ Stability in Jordan Economies stability inclusion SMEs capital adequacy risk |
| title | Determinants of Banks’ Stability in Jordan |
| title_full | Determinants of Banks’ Stability in Jordan |
| title_fullStr | Determinants of Banks’ Stability in Jordan |
| title_full_unstemmed | Determinants of Banks’ Stability in Jordan |
| title_short | Determinants of Banks’ Stability in Jordan |
| title_sort | determinants of banks stability in jordan |
| topic | stability inclusion SMEs capital adequacy risk |
| url | https://www.mdpi.com/2227-7099/10/12/311 |
| work_keys_str_mv | AT buthienakharabsheh determinantsofbanksstabilityinjordan AT omarkhlaifgharaibeh determinantsofbanksstabilityinjordan |