The relationship between profitability and cash flow in Jordanian banks
The relevance of this study lies in the importance of the two variables – profitability and cash flow – for the financial performance of banks, as well as the unique characteristics of the Jordanian banking sector. The purpose of the study is to investigate whether there is a significant relationshi...
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| Format: | Article |
| Language: | English |
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LLC "CPC "Business Perspectives"
2023-11-01
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| Series: | Banks and Bank Systems |
| Subjects: | |
| Online Access: | https://www.businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/19190/BBS_2023_04_Shubita.pdf |
| _version_ | 1797496342263627776 |
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| author | Mohammad Fawzi Shubita |
| author_facet | Mohammad Fawzi Shubita |
| author_sort | Mohammad Fawzi Shubita |
| collection | DOAJ |
| description | The relevance of this study lies in the importance of the two variables – profitability and cash flow – for the financial performance of banks, as well as the unique characteristics of the Jordanian banking sector. The purpose of the study is to investigate whether there is a significant relationship between profitability and cash flow in Jordanian banks and to identify potential factors that influence this relationship. The study methods are to employ a quantitative research method, using financial data from Jordanian banks over a period (2008–2019), Granger causality tests are used to describe the link between cash flow and profitability. The study results show a significant link between profitability and cash flow in Jordanian banks. Specifically, the study finds that a one percent increase in cash flow results in a 0.27 percent increase in profitability. The Adj-R2 for the three cash flow models is 11.4%, 17.3%, and 20.4%, respectively. Conversely, the Adj-R2 for the three models’ earnings are 21.4%, 21.5%, and 22.3%, respectively. However, the magnitude of the link seems to be weaker in Jordanian banks compared to banks in other countries. The study concludes that cash flow from operating is an important factor in improving the profitability of Jordanian banks. |
| first_indexed | 2024-03-10T03:02:19Z |
| format | Article |
| id | doaj.art-ff846729ae574c979f972ca9f83b6c12 |
| institution | Directory Open Access Journal |
| issn | 1816-7403 1991-7074 |
| language | English |
| last_indexed | 2024-03-10T03:02:19Z |
| publishDate | 2023-11-01 |
| publisher | LLC "CPC "Business Perspectives" |
| record_format | Article |
| series | Banks and Bank Systems |
| spelling | doaj.art-ff846729ae574c979f972ca9f83b6c122023-11-23T12:45:31ZengLLC "CPC "Business Perspectives"Banks and Bank Systems1816-74031991-70742023-11-0118419520810.21511/bbs.18(4).2023.1719190The relationship between profitability and cash flow in Jordanian banksMohammad Fawzi Shubita0https://orcid.org/0000-0001-7389-2108Ph.D., Professor, Accounting Department, Amman Arab UniversityThe relevance of this study lies in the importance of the two variables – profitability and cash flow – for the financial performance of banks, as well as the unique characteristics of the Jordanian banking sector. The purpose of the study is to investigate whether there is a significant relationship between profitability and cash flow in Jordanian banks and to identify potential factors that influence this relationship. The study methods are to employ a quantitative research method, using financial data from Jordanian banks over a period (2008–2019), Granger causality tests are used to describe the link between cash flow and profitability. The study results show a significant link between profitability and cash flow in Jordanian banks. Specifically, the study finds that a one percent increase in cash flow results in a 0.27 percent increase in profitability. The Adj-R2 for the three cash flow models is 11.4%, 17.3%, and 20.4%, respectively. Conversely, the Adj-R2 for the three models’ earnings are 21.4%, 21.5%, and 22.3%, respectively. However, the magnitude of the link seems to be weaker in Jordanian banks compared to banks in other countries. The study concludes that cash flow from operating is an important factor in improving the profitability of Jordanian banks.https://www.businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/19190/BBS_2023_04_Shubita.pdfbankscash flowemerging marketsJordanregression models |
| spellingShingle | Mohammad Fawzi Shubita The relationship between profitability and cash flow in Jordanian banks Banks and Bank Systems banks cash flow emerging markets Jordan regression models |
| title | The relationship between profitability and cash flow in Jordanian banks |
| title_full | The relationship between profitability and cash flow in Jordanian banks |
| title_fullStr | The relationship between profitability and cash flow in Jordanian banks |
| title_full_unstemmed | The relationship between profitability and cash flow in Jordanian banks |
| title_short | The relationship between profitability and cash flow in Jordanian banks |
| title_sort | relationship between profitability and cash flow in jordanian banks |
| topic | banks cash flow emerging markets Jordan regression models |
| url | https://www.businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/19190/BBS_2023_04_Shubita.pdf |
| work_keys_str_mv | AT mohammadfawzishubita therelationshipbetweenprofitabilityandcashflowinjordanianbanks AT mohammadfawzishubita relationshipbetweenprofitabilityandcashflowinjordanianbanks |