An Empirical Study of the Relationship Between Covid-19 and Jordanian Banks' Profitability

Abstract

Purpose: To investigate the impact of the COVID-19 pandemic on the profitability of Jordanian banks using financial disclosure data. Theoretical framework: The study focuses on the impact of external environmental factors such as the COVID-19 pandemic and non-performing loans on the profitability of Jordanian banks. Design/methodology/approach: The study uses a panel model to analyze financial disclosure data of 15 Jordanian banks between 2017 and 2021. The study employs both descriptive and inferential methods, utilizing a range of secondary sources including official reports, articles, electronic journals, and previous studies. Findings: The study reveals that the COVID-19 pandemic had a negative impact on the Return on Assets (ROA) of Jordanian banks. Additionally, the number of bank branches, earnings per share, and non-performing loans were significantly associated with ROA and Return on Equity (ROE). Research, Practical & Social implications: The study highlights the sensitivity of banks to external environmental factors such as pandemics and economic shocks, which can impact their solvency and trigger a chain effect that puts the entire economy at risk. The findings can inform policy decisions and help increase bank resilience in the face of future crises. Originality/value: The study contributes to the literature on the impact of external environmental factors on the profitability of banks in emerging economies such as Jordan. The study's use of financial disclosure data provides a unique insight into the performance of Jordanian banks during the COVID-19 pandemic.