The Role of Financial Performance and Government Involvement on Bank Profitability: The Case of Jordan

Banking sector is one of the most important sectors in each country, it can be considered as the engine of the economy. Thus, profitability index for banks should be measured and rated. The primary goal of this thesis is to measure the financial performance of top nine commercial banks operating in Jordan during the period 2011-2017 using CAMEL model and law and order. According to the results of the thesis, it is shown that liquidity and assets quality variables have a significant effect on both ROA and ROE models, Management has a significant effect on ROA model but non for ROE, capital adequacy and low and order variables have a significant effect on ROE model but have no effect on ROA model. We can shortly conclude that Jordanian banking sector is a profitable sector reflected by the efficiency of this sector, which requires some improvements to take into the consideration to keep growing this sector, we suggest that Jordanian banks must monitor (PLL) which is provision loan loss, decrease loans write off as possible as they can to increase banks profit, try to decrease dividends payment and increase in employee’s productivity and decrease in non-interest expense to improve the efficiency, also implement the government laws in effective way. Keywords: Banking System, Profitability, Commercial Banks, CAMEL Approach, Law and Order, Jordan.