Does The Credit Risk Management Affect The Financial Performance Of Banks? Evidence From Jordan

The purpose of this study is to examine the relationship between credit risk management indicators and the financial performance of listed banks in Jordan, and compare the efficiency of credit risk management between Islamic and conventional banks. The study used the annual report for listed Jordanian banks during the period of 2013 to 2017. The researchers found capital adequacy ratio has a positive and significant relationship with ROA and ROE, and cost per loan ratio has a negative and significant relationship with ROA, ROE, and TQ. Loan loss reserve ratio has a negative and significant relationship with TQ, while bank size has positive and significant impacts on the financial performance of banks measured by TQ. Credit risk management in Islamic banks is better than conventional banks and Islamic banks have higher profitability. The paper investigates only the banking sector in Amman stock exchange, future research may look into the whole sectors in Amman stock exchange.