The effect of internal risks on the performance of Jordanian commercial banks
This study mainly aimed to examine the effect of internal risks on the financial performance of
the Jordanian commercial banks. The study sample comprised the entire commercial banks that
are included in the Amman Stock Exchange (ASE) spanning the period from 2009 to 2019.
The study formulated four hypotheses, which are related to the effects of liquidity risk and
leverage risk on the bank?s performance, proxied by ROA and ROE. Based on the results,
liquidity risk did not have a significant effect on both ROA and ROE, while leverage risk did
not have a significant effect on ROA, but it did on ROE. It can thus be concluded that the use
of financial leverage should be taken into consideration because of its negative influence on
the banks? financial performance, specifically on the shareholders? returns. It is recommended
that future studies examine the effect of additional risk types, like credit risk and operational
risk on the performance of banks.