The Impact of Macroeconomic Variables and Banks Characteristics on Jordanian Islamic Banks Profitability: Empirical Evidence

The aim of this study is to determine the effect of macroeconomic Variables (external variables) and bankcharacteristic (internal variables) on the profitability of Jordanian Islamic banks for the period (2000–2011).thestudy used panel data analysis fixed effects model and the generalized least square method to examine the studyhypotheses. The empirical analysis shows that capital adequacy, bank size have a positive and significant impacton return on assets (ROA) and return on equity (ROE). While leverage measured by total deposit to total assetshas a negative and significant impact on (ROA) and (ROE). The liquidity has an inersary insignificant effect on(ROA) and negative significant impact on (ROE). The study found that macroeconomic factors represented byAmman stock exchange index, construction licensed square meters and money supply growth are gooddeterminants for Islamic banks profitability.