Determinants of domestic bank lending behavior evidence of Jordan

According to the importance of banking industry and the role of banks in improving the financial project, financial activities and the economy of countries, this study examines the determinant of lending which is the main source of banking business. In this study, we analyzed the determinants of lending for Jordanian domestic banks considering 16 banks for the period 2005 to 2014. Where 11 factors impacting banks lending analyzed by using unbalanced panel data to examine the relationship between dependent variable and independents variables. The results of regression showed that liquidity ratio, management quality, return on asset ratio, volume of deposits and inflation rate had positive and significant impact on banks’ lending while credit risk, return on equity ratio and regional crisis had negative and significant impact on banks’ lending also the result found that equity to asset ratio, bank size and global crisis had statistically insignificant impact on bank’s lending. So the study suggested that banks should work better to receive more deposits and take caution in making decisions related to lending to avoid any default in bad loans. Experience and skills management will affect directly on the banks’ liquidity and profitability which lead to influence the banks’ ability of lending. Keywords: Jordan, bank lending, panel data, determinants of lending