Country or bank-specific factors: A study to explain bank performance

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Abstract

Bank performance is an issue that has attracted so much research effort. Within this context, banks in Jordan and Palestine provide us with an interesting research issue. In Palestine, eight of the thirteen existing banks are Jordanian. Moreover, due to an obvious reason (Israeli occupation), one can argue that the economic and political environments in Jordan and Palestine could not have been more contrasting. This paper examines the determinants of the performance of banks in Jordan and Palestine. In addition, the paper examines whether the differences in the determinants of their performance are due to bank-specific factors, or country-specific differences. Using the financial statements of all thirteen Jordanian banks and the thirteen Palestinian banks (eight of which are Jordanian) over the time period 2009–2017 and panel data methods, the results indicate that factors like credit and expenses affect the performance of both sets of banks. Moreover, the results indicate that the differences in their impact are due to country-specific and not bank-specific factors. This result is probably not surprising given the relatively stable (unstable) circumstances that Jordan (Palestine) enjoys (does not enjoy).

Keywords: Bank Performance, Return on Assets, Net Interest Margin, Operating Expenses

Authors’ individual contribution: Conceptualization — Z.M. and G.O.; Methodology — Z.M. and G.O.; Validation — Z.M., G.O., and F.H.; Formal Analysis — Z.M., G.O., and F.H.; Investigation — Z.M., G.O., and F.H.; Resources — Z.M., G.O., and F.H.; Writing — Original Draft — Z.M., G.O., and F.H.; Writing — Revision & Editing — Z.M., G.O., and F.H.; Visalization — Z.M., G.O., and F.H.; Supervision — Z.M.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: G20, G21, G24

Received: 01.08.2021
Accepted: 01.11.2021
Published online: 05.11.2021

How to cite this paper: Marashdeh, Z., Omet, G., & Haddad, F. (2021). Country or bank-specific factors: A study to explain bank performance. Corporate Governance and Organizational Behavior Review, 5(2), 66–71. https://doi.org/10.22495/cgobrv5i2p6