Evaluating The Relationship Between Credit And Liquidity Risk Exposures And Financial Performance Of Listed Islamic And Conventional Banks In Jordan And Selected GCC Countries
The effects of credit and liquidity risk exposures on bank performance have received much attention in the last years in both developing and developed countries due to the collapse of a number of large banks and numerous financial scandals. Furthermore, credit and liquidity risks are the most signif...
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Universiti Sains Islam Malaysia |
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USIM Institutional Repository |
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| topic |
Financial risk management Bank liquidity--Management Financial risk management Financial risk management |
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Financial risk management Bank liquidity--Management Financial risk management Financial risk management Areen Zuhair Abdallah Alta’ani Evaluating The Relationship Between Credit And Liquidity Risk Exposures And Financial Performance Of Listed Islamic And Conventional Banks In Jordan And Selected GCC Countries |
| description |
The effects of credit and liquidity risk exposures on bank performance have received much attention in the last years in both developing and developed countries due to the collapse of a number of large banks and numerous financial scandals. Furthermore, credit and liquidity risks are the most significant risks faced by banks, as granting credit is one of the main sources of income for banks. Banks may fail if they do not maintain adequate liquidity, despite having good asset quality, strong earnings, and sufficient capital. This thesis aims to (1) examine the relationship between credit and liquidity risk exposures and the financial performance of listed banks in Jordan, (2) compare credit and liquidity risk exposures between Jordanian, Qatari, and Saudi Arabian banks, (3) compare credit and liquidity risk exposures between IBs and CBs in Jordan, Saudi Arabia, and Qatar, and (4) to develop a new model (CRETY) for evaluating credit and liquidity risk exposures in Islamic and conventional banks. This study adds four contributions to existing practical and theoretical knowledge: First, this thesis developed a new comprehensive model (CRETY) for measuring risk disclosures practices, particularly credit and liquidity risk, which includes a unique set of financial structure and bank-specific determinants of performance. Second, this thesis increases the understanding of bank performance in a new contextual benchmark, credit and liquidity risk exposures of IBs and CBs. Third, this thesis developed a comparative risk exposures model by comparing three banking sectors in Jordan, Saudi Arabia, and Qatar with different types and sizes of banks. Fourth, Islamic rules have a significant impact on bank performance; it extends the knowledge on the relationship between credit and liquidity risk exposures and bank performance by comparing between IBs and CBs. This thesis collected data from CBs and IBs in Jordan, Qatar, and Saudi Arabia from 2013 to 2017. The data were analyzed using random, fixed effects, and feasible generalized least square regression analysis. Credit risk exposures were measured using non-performing loans, capital adequacy ratio, cost per loan, loan loss reserve, and loan growth ratio, while liquidity risk exposures were measured using current ratio, loan to deposit ratio, loan to assets ratio, cash to deposit ratio, and leverage ratio. Bank performance was measured using ROA, ROE, and Tobin’s Q. The results showed that Jordanian banks had higher non-performing loans, cost per loan, and loan loss reserve ratio, thus credit risk exposures in Saudi Arabia and Qatar banks is lower than Jordanian banks. Jordanian banks had the lowest loan to deposit ratio and loan to asset ratio, and they had the highest cash to deposit ratio and leverage ratio. Thus, liquidity risk exposures in the Jordanian banking sector are lower than the Saudi Arabia and Qatar. In addition, the findings showed that IBs have lower credit risk than CBs, particularly in non-performing loans and loan loss reserve. IBs had higher current ratio and cash to deposit ratio, and therefore higher liquidity. The FGLS results showed there is a significant relationship between CRE and LRE and Jordanian bank performance. The findings indicate that regulators and policy makers should take into consideration the specific features of Islamic compliant contracts in developing effective risk management tools and applying them to the entire banking sector. In addition, this study is useful for academics, regulators, policy makers, and users of financial statements in Jordan and GCC countries. This study recommends comparing credit and liquidity risk exposures under Basel III standards and IFRS 9 to determine whether the new standard has a real impact on the performance of banks in Jordan and GCC countries. In addition, future studies can expand this scope to include the risk management and financial performance of insurance firms, cooperative banks, and development banks. Further research could consider other approaches, such as interview or questionnaire, to examine this issue from other perspectives. |
| format |
Thesis |
| author |
Areen Zuhair Abdallah Alta’ani |
| author_facet |
Areen Zuhair Abdallah Alta’ani |
| author_sort |
Areen Zuhair Abdallah Alta’ani |
| title |
Evaluating The Relationship Between Credit And Liquidity Risk Exposures And Financial Performance Of Listed Islamic And Conventional Banks In Jordan And Selected GCC Countries |
| title_short |
Evaluating The Relationship Between Credit And Liquidity Risk Exposures And Financial Performance Of Listed Islamic And Conventional Banks In Jordan And Selected GCC Countries |
| title_full |
Evaluating The Relationship Between Credit And Liquidity Risk Exposures And Financial Performance Of Listed Islamic And Conventional Banks In Jordan And Selected GCC Countries |
| title_fullStr |
Evaluating The Relationship Between Credit And Liquidity Risk Exposures And Financial Performance Of Listed Islamic And Conventional Banks In Jordan And Selected GCC Countries |
| title_full_unstemmed |
Evaluating The Relationship Between Credit And Liquidity Risk Exposures And Financial Performance Of Listed Islamic And Conventional Banks In Jordan And Selected GCC Countries |
| title_sort |
evaluating the relationship between credit and liquidity risk exposures and financial performance of listed islamic and conventional banks in jordan and selected gcc countries |
| granting_institution |
Universiti Sains Islam Malaysia |
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my-usim-ddms-133152024-05-29T18:11:40Z Evaluating The Relationship Between Credit And Liquidity Risk Exposures And Financial Performance Of Listed Islamic And Conventional Banks In Jordan And Selected GCC Countries Areen Zuhair Abdallah Alta’ani The effects of credit and liquidity risk exposures on bank performance have received much attention in the last years in both developing and developed countries due to the collapse of a number of large banks and numerous financial scandals. Furthermore, credit and liquidity risks are the most significant risks faced by banks, as granting credit is one of the main sources of income for banks. Banks may fail if they do not maintain adequate liquidity, despite having good asset quality, strong earnings, and sufficient capital. This thesis aims to (1) examine the relationship between credit and liquidity risk exposures and the financial performance of listed banks in Jordan, (2) compare credit and liquidity risk exposures between Jordanian, Qatari, and Saudi Arabian banks, (3) compare credit and liquidity risk exposures between IBs and CBs in Jordan, Saudi Arabia, and Qatar, and (4) to develop a new model (CRETY) for evaluating credit and liquidity risk exposures in Islamic and conventional banks. This study adds four contributions to existing practical and theoretical knowledge: First, this thesis developed a new comprehensive model (CRETY) for measuring risk disclosures practices, particularly credit and liquidity risk, which includes a unique set of financial structure and bank-specific determinants of performance. Second, this thesis increases the understanding of bank performance in a new contextual benchmark, credit and liquidity risk exposures of IBs and CBs. Third, this thesis developed a comparative risk exposures model by comparing three banking sectors in Jordan, Saudi Arabia, and Qatar with different types and sizes of banks. Fourth, Islamic rules have a significant impact on bank performance; it extends the knowledge on the relationship between credit and liquidity risk exposures and bank performance by comparing between IBs and CBs. This thesis collected data from CBs and IBs in Jordan, Qatar, and Saudi Arabia from 2013 to 2017. The data were analyzed using random, fixed effects, and feasible generalized least square regression analysis. Credit risk exposures were measured using non-performing loans, capital adequacy ratio, cost per loan, loan loss reserve, and loan growth ratio, while liquidity risk exposures were measured using current ratio, loan to deposit ratio, loan to assets ratio, cash to deposit ratio, and leverage ratio. Bank performance was measured using ROA, ROE, and Tobin’s Q. The results showed that Jordanian banks had higher non-performing loans, cost per loan, and loan loss reserve ratio, thus credit risk exposures in Saudi Arabia and Qatar banks is lower than Jordanian banks. Jordanian banks had the lowest loan to deposit ratio and loan to asset ratio, and they had the highest cash to deposit ratio and leverage ratio. Thus, liquidity risk exposures in the Jordanian banking sector are lower than the Saudi Arabia and Qatar. In addition, the findings showed that IBs have lower credit risk than CBs, particularly in non-performing loans and loan loss reserve. IBs had higher current ratio and cash to deposit ratio, and therefore higher liquidity. The FGLS results showed there is a significant relationship between CRE and LRE and Jordanian bank performance. The findings indicate that regulators and policy makers should take into consideration the specific features of Islamic compliant contracts in developing effective risk management tools and applying them to the entire banking sector. In addition, this study is useful for academics, regulators, policy makers, and users of financial statements in Jordan and GCC countries. This study recommends comparing credit and liquidity risk exposures under Basel III standards and IFRS 9 to determine whether the new standard has a real impact on the performance of banks in Jordan and GCC countries. In addition, future studies can expand this scope to include the risk management and financial performance of insurance firms, cooperative banks, and development banks. Further research could consider other approaches, such as interview or questionnaire, to examine this issue from other perspectives. Universiti Sains Islam Malaysia 2023-01 Thesis en_US https://oarep.usim.edu.my/handle/123456789/13315 https://oarep.usim.edu.my/bitstreams/983ef553-f0b0-4f4f-84eb-7e168570617c/download 68b329da9893e34099c7d8ad5cb9c940 https://oarep.usim.edu.my/bitstreams/49053add-586f-467e-9f9c-3e24db35b75b/download e2b65d9641b82231aa5b033d548be043 https://oarep.usim.edu.my/bitstreams/4b5ac069-febc-426b-bd74-62779c49e289/download 7605f1ac34665a8ae28882ff1854991a https://oarep.usim.edu.my/bitstreams/c3e584df-1432-445d-a452-183b9bf0e873/download bf8a309d65fd889febe490342c6be733 https://oarep.usim.edu.my/bitstreams/60379af4-4092-40e9-88bf-63dbcd45c048/download 5198483de907ec01e95abcd32990a1c3 https://oarep.usim.edu.my/bitstreams/70a76ccb-9d5b-4dc3-9157-230788ccc6d2/download 81ab0828b0a58d4129310d61722c2db1 https://oarep.usim.edu.my/bitstreams/16e21152-a8d1-45ba-871e-a22459a0c475/download 861830b077b0d49dcb8e062c65002692 https://oarep.usim.edu.my/bitstreams/fb5cbc00-82ed-4f51-99be-915ab30ed2ba/download ad1479c32a9d02cc02183917e9885fcf https://oarep.usim.edu.my/bitstreams/7999b6df-8402-4b17-beb4-5e5984195683/download 463d88f7e533452ec41d67d616ae66ca https://oarep.usim.edu.my/bitstreams/5ee12e1f-3442-42c4-ae23-f6ed9f6ecb2c/download efcb7ada7515e725a51421a11dd411ff https://oarep.usim.edu.my/bitstreams/8e7173cf-2a2b-4977-b9dd-05a41fda9c3a/download 8a4605be74aa9ea9d79846c1fba20a33 https://oarep.usim.edu.my/bitstreams/cce889d2-b643-498e-ae4e-d9c0594435e3/download 3a2f44e2b3694cfe26bcae2c241ee060 https://oarep.usim.edu.my/bitstreams/272ac9b3-d887-49b2-b619-31a19e701955/download 54d36e20a56ab2cfdd5eb12b87d2f57e https://oarep.usim.edu.my/bitstreams/8a080581-90f6-43dc-a1b4-3408e885b4bc/download e5aa329337aad744a95b1f3d56048ce9 https://oarep.usim.edu.my/bitstreams/c68f9653-244b-469b-9ed4-3631a29eedee/download 66ed7b0b21fefa5a5fd82d201cd750ce https://oarep.usim.edu.my/bitstreams/ef3d8807-6543-4bd4-851b-4df53afc7fd8/download 2bdc622d9240de892ce4d4bf7039e455 https://oarep.usim.edu.my/bitstreams/6c2cec7e-6427-4244-9639-c62140527160/download 1cce71e9ae8293b0dce52eea85c8e475 https://oarep.usim.edu.my/bitstreams/82e66575-1efd-4368-8ad0-ac61c261b800/download 433977b3480d38cc1ca75193c3601bf3 https://oarep.usim.edu.my/bitstreams/11bd984e-bf69-4bc5-afb3-67444a2cedce/download ecbb44e3d5b7ac052c5c0a8a068cbbdf https://oarep.usim.edu.my/bitstreams/05e319a6-90c4-4faa-a28d-ff28a500d56a/download 8fac538c17d871ec63a59a309e3bbdb4 https://oarep.usim.edu.my/bitstreams/31c26870-14ae-4f18-b66a-230c1bcf37bd/download 9b93834d68284103ab12c38012a7be08 Financial risk management Bank liquidity--Management Banks and banking, International Credit and liquidity risk, Islamic and conventional banks. |