The Impact of Prudential Regulation on Jordanian Banks Liquidity

Mustafa, Jamileh Ali

doi:10.11648/j.ijber.20200905.17

IJBER

2020

DOI: 10.11648/j.ijber.20200905.17

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The Impact of Prudential Regulation on Jordanian Banks Liquidity

Jamileh Ali Mustafa¹

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Cited by 2 publications

References 15 publications

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From innovation to stability: Evaluating the ripple influence of digital payment systems and capital adequacy ratio on a bank’s Z-score

Ali Mustafa

2024

Banks and Bank Systems

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This study investigated the influence of digital payment systems on banks’ stability by exploring their effect on the Z-score of the Jordanian banking sector during the period from 2004 until 2022. It specifically focused on liquidity risks generated from e-payment transactions and how sufficient capital adequacy ratios enhance banking sector stability over both short-term and long-term periods by standing against sudden volatilities yielded from large amounts of transactions executed through digital payment systems. To achieve this objective, the study utilizes time series dual regression analyses of vector autoregression and vector error correction models on E-views 12 to cover the time variation influences of digital payment on the banking sector Z-score. The regression results indicate varied effects between the benefits and risks of digital payment systems on a bank’s Z-score that influence the immediate sector’s stability, indicating that while digital payment systems can initially hold liquidity risks, leading to short-term instability; the strategic implementation of robust capital adequacy ratio stands as a protective buffer by fostering long-term banking sector resilience. The results also suggest future predictions and insights for financial sector legislators and regulators emphasizing the need for monitoring strategies that stimulate continuous innovations in the digital payment infrastructure while constantly ensuring the stability and resilience of the banking sector. Thus, prudent liquidity management and the reinforcement of capital buffers are encouraged to pilot the dual challenges and opportunities that appeared at the stages of the digital payment process, ultimately guiding the sector toward continuous growth and sustainability. AcknowledgmentThe author is grateful to the Middle East University, Amman, Jordan for the financial support granted to cover the publication fee of this research.

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From innovation to stability: Evaluating the ripple influence of digital payment systems and capital adequacy ratio on a bank’s Z-score

Ali Mustafa

2024

Banks and Bank Systems

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The effect of macroprudential regulation on banks’ profitability during financial crises

Atta¹,

Mustafa²,

Al-Qudah³

et al. 2023

CGOBR

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This study aims to investigate the effect of macroprudential regulation on banks’ profitability during financial crises, to find out whether the instruments of the Central Bank of Jordan (CBJ) enhance the performance of the Jordanian banking sector in terms of increasing banks’ profitability and reducing banking sector exposure to financial crisis vulnerability. The sample of the study consists of twelve listed banks in Jordan over the period 2000–2018. The bank’s return on assets (ROA) was regressed on instruments by using the fully modified ordinary least square (FMOLS) method. The results had shown a slightly weak significant effect of stress testing (ST) on the banks’ ROA. Capital adequacy ratio (CAR) had no significant effect, leverage ratio had the deepest effect, and banks are highly leveraged with more debt-to-equity ratio. In addition to that, a good number of the banks maintain CAR, loan-to-value (LTV), and leverage ratios higher than the minimum limit required by the CBJ and Basel requirements, suggesting that the Basel standards did not take into consideration the particularity of some countries. The results also revealed that CBJ prudential regulation instruments are succeed in keeping the stability of the banking sector profitability during previous financial crises, but still need to enhance the level of gearing for banks against future shocks

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The Impact of Prudential Regulation on Jordanian Banks Liquidity

Cited by 2 publications

References 15 publications

From innovation to stability: Evaluating the ripple influence of digital payment systems and capital adequacy ratio on a bank’s Z-score

From innovation to stability: Evaluating the ripple influence of digital payment systems and capital adequacy ratio on a bank’s Z-score

The effect of macroprudential regulation on banks’ profitability during financial crises

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