Government-Linked Banks' Performance in Jordan

The main objective of this study is to examine the relationship between government ownership and bank performance in Jordan. The banking sector has been widely ignored in the past corporate governance studies due to its strict system. Using a panel data from 2004 to 2013 (147 observations/years), the multiple regression analysis shows that increasing the percentage of shareholdings leads to higher profitability. Additional government-linked banks (GLBs) generally outperform their unlinked counterparts. However, their outperformance is contingent to the significance percentage of the shareholdings. On other words, if the government shareholdings are not significant (less than 10%) the government ownership does not make a significant difference in the performance. Using panel data provide us with a significant roles played by the period of the study. The banks show increasing in their performance through the period of this study. However, the size and the age of the banks are found to be insignificant while the leveraged banks significantly underperform their counterparts. The results of this study might be of interest of potential investors, policy makers, governance agencies and information users