THE INTERNAL AND EXTERNAL DETERMINANTS OF THE PERFORMANCE OF JORDANIAN ISLAMIC BANKS: A PANEL DATA ANALYSIS
The primary aim of this study is to evaluate the performance of Islamic banks in Jordan
and identify the significant factors that influence their performance. The study focused
on the three Islamic banks in Jordan that are listed on the Amman Stock Exchange
(ASE) for which data was obtained from 2009 to 2020. A panel data analysis, random
effects model and the generalized least squares (GLS) method were used to analyze the
data and to test the study hypotheses. Based on the results, credit risk and capital
adequacy positively and statistically affect the performance of Islamic banks in Jordan,
measured using return on assets (ROA) and return on equity (ROE). With regard to
external determinants, the GDP growth rate was shown to positively and statistically
affect the performance of Islamic banks. The results also indicate that money supply
(M2) statistically affects the performance of Jordanian Islamic banks (ROE).