The Impact of Macroeconomic, Structural Variables and Banks’ Characteristics on Islamic Banks Performance: Panel Evidence from Jordanian banks (2000-2014)

The study examines the determinants of Jordanian Islamic banks’ performanceduring the period 2000-2014 and the study sample includes 2 Islamic banks. A variety ofbank-specific Characteristics (internal determinants: capital, deposit, risk, efficiency,liquidity), macroeconomic and structural determinants (external variables: GPD, inflationand bank size) are used to predict the performance, using the panel regression analysis.Theresults reveal that: first, all internal banks’ determinants, with the exception of liquidity riskand efficiency, significantly affect the Islamic banks profitability using both measures(ROE and ROA) in the study period. Second, the paper finds that the macro-economicindicators such inflation and GDP have a significant impact on Islamic bank’s performance.Finally, turning to financial structure and its impact on bank’s performance, the researcherfinds that size is beneficial to the Jordanian Islamic banks.