Examining the causal factors of banking achievements for Islamic banks in Jordanian Islamic banks: An analytical study

Abdullah Yusri AL  Khatib; Sari Sulaiman  Malahim; Ibrahim Marwan  Khanji; Al’a Ata  Jaradat

doi:10.33094/ijaefa.v16i2.979

Authors

Abdullah Yusri AL Khatib Islamic Banks Department, Finance and Business Faculty, the World Islamic Sciences and Education University, Amman, Jordan. https://orcid.org/0000-0002-5861-3470
Sari Sulaiman Malahim Islamic Banks, Department of Financial and Banking Sciences, Amman University College for Financial and Administrative Sciences, Al-Balqa Applied University, Amman, Jordan. https://orcid.org/0000-0001-5142-141X
Ibrahim Marwan Khanji Virginia Institute of Finance & Management, Dubai, United Arab Emirates. https://orcid.org/0000-0001-8268-0035
Al’a Ata Jaradat Islamic Banks Department, Finance and Business Faculty, the World Islamic Sciences and Education University, Amman, Jordan. https://orcid.org/0000-0003-4056-9480

DOI:

https://doi.org/10.33094/ijaefa.v16i2.979

Keywords:

Banking achievements, Cash and investments, Credit facilities, Dividend yield, Financial performance, Islamic banks, Shareholders’ equity.

Abstract

This study focuses on examining the causal factors and determinants of financial banking achievements and performances for the working Jordanian Islamic Banks, including Safwa Islamic bank, International Islamic Arab Bank (IIAB), and Jordan Islamic Bank (JIB) during (2011 – 2021). The study considered the most popular measurements for financial banking performances, namely Return on Equity (ROE), Return on Assets (ROA), and dividend yield (DY) as dependent variables. Additionally, the factors of independent variables were measured by quick liquidity ratio, investments and cash to the summation of total deposits, shareholders’ equity to facilities of credit, and equity ratios. The findings showed a positive and significant influence and impact of investments and currency to the summation of aggregate deposits and equity ratio on return on equity, and a negative significant impact of shareholders’ equity on return on equity. However, there was a negative but not significant influence of liquidity (quick) ratio on ROE. Furthermore, the findings indicated a positive and significant impact of investments and currency (cash) to aggregate banking deposits and equity ratio on return on assets, but there was a negative but not significant impact for liquidity quick ratio and shareholders’ equity to credit facilities on return on assets. The liquidity (quick) ratio had a significant and negative impact on dividend yield. Although there was a positive but insignificant impact of investments and cash to the summation of total deposits and equity ratios on dividend yield, there was a greater negative and insignificant impact from shareholders’ equity to credit facilities on dividend yield.