Internal risks Affect the Financial Performance of the Banks: Evidence from Jordan

Abstract

The study examines the effect of internal risks on the financial performance of the banks in Jordan. The study was conducted on the financial statements of 15 banks, which covered the period (2013-2023). The financial statements of these banks for the year 2020 were excluded due to the exposure of various economic sectors to a decline in their performance as a result of the continuous ban under the Defense Law applied during the Corona period. Averages and standard deviations are used to describe the data, and correlation coefficient and regression are used to test the study hypotheses. The findings of study showed that the impact of capital adequacy on the financial performance of banks in Jordan was positive, while the impact of credit risk, liquidity risk and operational risk were negative on the performance of these banks.
The study recommends bank management in Jordan abide by the instructions issued by the Central Bank of Jordan, and the successive decisions issued by the Basel Committee to face risks that affect their performance.