Effects of risk management practices on banks' performance: An empirical study of the Jordanian banks

Despite the importance of risk management in the banking sector, little research has been devoted to the Arabian settings. This paper investigates the effect of risk management practices (i.e., understanding risk and risk management, risk analysis and assessment, risk identification, risk monitoring, and credit risk analysis) on Jordanian commercial banks' performance. The study utilizes a quantitative approach by obtaining survey data from risk managers and employees in risk management departments (n=23) of commercial banks. A partial least squares structural equation modeling (PLS-SEM) was applied on the data and the results showed that the components of risk management practices had positive and significant impacts on the performance of banks. In sum, the findings corroborate existing work in the Western settings and underscore the importance of risk management in the Arabian banking context.