Geographic Expansion and Banks’ Risk: Evidence from Jordan | ||||
| المجلة العربية للإدارة | ||||
| Article 16, Volume 39, Issue 2, June 2019, Page 295-308 PDF (398.24 K) | ||||
| Document Type: بحوث باللغة الإنجلیزیة | ||||
| DOI: 10.21608/aja.2019.36161 | ||||
 View on SCiNiTO | ||||
| Authors | ||||
| Buthiena Kharabsheh1; Demeh Daradkah2 | ||||
| 1Department of Banking and Finance, Faculty of Economics and Administrative Sciences, Yarmouk University, Hashemite Kingdom of Jordan | ||||
| 2Department of Banking and Finance, Faculty of Economics and Administrative Sciences, Yarmouk University, Hashemite Kingdom of Jordan | ||||
| Abstract | ||||
| This study investigates the impact of geographic expansion on banks’ risk and loan quality in Jordan during the period from 2000 to 2014. Geographic expansion is measured by Shannon Entropy whereby the bank’s risk is measured by standard deviation of ROA, standard deviation of ROE and Z-score. We find evidence that the banking industry in Jordan is highly concentrated and that although banks’ risk decreased with geographic expansion, loan quality was not affected. In addition, the results point to an important issue, that banks in Jordan are only impacted positively by geographic diversification, despite being negatively affected by main economic sector diversification, and are not affected by diversification in the broader sector i.e., service sector. These results are robust using alternative concentration measures and different estimation methods. | ||||
| Keywords | ||||
| Geographic Expansion; Banks; Shannon Entropy; Jordan; Risk | ||||
| References | ||||
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