Comparison of Profitability Indicators of Commercial Banks: The Case of Jordan and Palestine

Banking system could be determined as one of the major drivers of the economy. Moreover, the banking sector is the most important financial intermediary as a channel of funds from people who have extra money (savers), to those who do not have enough money to carry out a desired activity (borrowers). Thus, indicators which are related with profitability of the banking system needs to be rated. The primary goal of the current study is to compare experimentally and measure the financial performance of conventional banks which are operating in Jordan and Palestine during the period of 2008-2014. Furthermore, in the current study, macroeconomic variables as well as financial ratios within a CAMEL approach. To create a good evaluation in terms of experimentally, most commonly practiced ratios are employed for the present study. Two profitability indicators which are used in the current study are dependent variables. Moreover, data is also monitored for sturdiness of the model and OLS method is utilized through adoption E-views program. Moreover, numerous articles which are related with banking literature were surveyed to shape most appropriate model. According to the result of this study it is shown that the profitability indicators are almost the same for both countries, in other words, can be said that there is no statistical difference between them. Keywords: Banking system, profitability, conventional banks, OLS, CAMEL, Jordan, Palestine.