including, profitability, credit growth rate, customer deposits, financial leverage, capital adequacy, and bank size.

The secondary data covering the period 2008-2019, of 13 out of 15 listed banks at Amman Stock Exchange, is

gathered and analyzed. In total, 1,092 observations are employed in the analysis to achieve the goals of the study.

All hypotheses are tested under 95 level of confidence, which means 5 percent coefficient of significance.

Descriptive statistics including the mean, standard deviation, and the minimum and maximum values, in addition to

correlations, are employed in the analysis of data. Using correlation and regression methods in hypotheses testing,

the study declares that profitability, capital adequacy, and bank size, each of which, has a significant positive

impact on bank liquidity. In addition, the study finds that financial leverage and customer deposits have a negative

significant effect on bank liquidity. Moreover, the study finds no significant impact of credit growth rate on bank

liquidity.

1 Introduction

Liquidity is important as profitability is, because

each of which may lead to collapse and bankruptcy

of business organization. The global financial crisis

of 2008, shed light for analyzing liquidity and its

different determinants. Studying liquidity

determinants can be accomplished using different

methods. Using financial ratios in measuring the

different countries showed a decline in liquidity,

especially in USA and other western countries, and

the commercial banking system faced a difficulty in

liquidity creation. Some experts and authors

mentioned that the difficult of liquidity creation faced

by commercial banks of some western countries, is

mainly due to low efficiency of markets, and

financial problems of counterparties [9]. Some found

satisfy the funding needs of business organizations.

In opposite when a low liquidity level is available to

commercial banks, other business organizations will

face difficulties to finance its investments.

issue for the economic growth of different countries

all over the world. Commercial banking liquidity

offers loans and help financing other firms of

different industries. In addition, many new small

businesses emerged when it offered loans and

financing by commercial banks. Commercial banks

new businesses and the growing investments create

job opportunities for local and for foreigners of rare

qualifications internally. In Jordan, there is a severe

problem of unemployment, less investments, low

attraction of foreign investments, high inflation, and

low rate of economic growth. Therefore, commercial

banks of Jordan can play a vital role in declining the

negative effect of all of these bad economic

indicators. Again, this can occur only when high

level of liquidity is available to commercial banks.

importance is due to the importance of banking

industry, and its required funding role to other

productive aspects in different countries. The

findings of the study are important to commercial

bank managements, because commercial banks can

make a balance between its liquidity and

profitability, through deposit and credit policies.

Following some policies, which keep banks liquid,

and less risky, and avoiding some policies will

interbank markets, and later extended in 2010, to a

sovereign debt crisis in some European countries,

such as Greece, Spain, Portugal, Italy, and. Before

the financial crisis began in the first half of 2007,

new regulations for banks were in practice in the

form of Basel II, but during the 2008 financial crisis,

only banks that have enough levels of liquidity could

resist the shortage in liquidity problems and continue

meet its obligations. This causes Basel Committee on

Banking Supervision (BCBS) to issue new banking

regulations called 12 Basel III, where these new

increases in assets and meet obligations as they come

due, without incurring unacceptable losses” [6].

Liquidity of banks is very important issue, where this

importance comes from its role of transforming

short-term deposits into long-term loans.

make a threat to its solvency. Examples of risks that

banks may face include interest rate, market rate, off-

balance sheet, foreign exchange, and other risks.

Nevertheless, banks may continue subject to

Saunders et al (2006) distinguish between two

sources of liquidity risk, the asset side source, and the

liability side source. The assets side of the balance

sheet may be an actual source of liquidity risk when a

bank exercises what is called, off-balance sheet

obligations. This occurs when a bank agrees for a

contract to grant a loan, where based on this this type

of contracts, customers receive an agreed amount,

and the bank is required to offer the borrowed

amount immediately on demand, where this type of

financial performance, capital to total assets, opening

costs to total assets, GDP rate of growth, inflation

rate, and delayed liquidity, each of which has a

significant impact on liquidity. Moreover, the study

finds that the liquidity of Tunisian banks is not

affected by each of bank size, loans to assets ratio,

deposits to total asset, financial costs to total credits

ratio, and bank size.

to determine the most important determinants of

bank liquidity. Secondary data covering the period

inflation and the non-performing has a positive

significant effect on the liquidity of commercial

banks. Moreover, the study findings revealed that

each of GDP, and GDP growth rate does not affect

the liquidity of Tanzanian banks.

Nepal, as an attempt to determine the factors

affecting liquidity. Secondary data covering the

period 2002- 2018, due to 12 commercial banks in

Nepal, had gathered and analyzed. The multiple

commercial banks. The study also revealed that

internal factors affect bank liquidity more than

macroeconomic external factors. In addition, it

revealed that at the long run, capital adequacy, bank

size, and capital expenditures lead to an increase in

bank liquidity, whereas deposits decrease liquidity of

banks.

to bank liquidity and objected for examining the

determinants of liquidity of 17 listed banks at the

position of these banks.

Ho5. Commercial bank’s capital adequacy has no

significant influence on the liquidity of commercial

banks of Jordan.

Ho6. The liquidity position of the commercial banks

of Jordan is not significantly affected by the bank

size.

Ho7. There is no grouping effect of bank

profitability, credit growth rate, client deposits, debt,

capital adequacy, and bank size, on the liquidity

position of commercial banks of Jordan.

The population of the study includes the different

non-Islamic banking enterprises of Jordan. In total,

and by the end of 2020, there were 15 commercial

banks listed at ASE, of these, 2 are Islamic, and the

collected data covers a 12-year period (2008-2019),

and it had collected using the annual reports of ASE.

Liquidity, whereas 6 variables are independent and

thereafter examined with regard to their effect on

liquidity. The independent variables of the study

from year to year. Where DPS refers for deposits,

FLR refers for bank financial leverage. Moreover,

CAR denotes for capital adequacy, and BSZ refers

for bank size.

standard deviation, minimum value, and maximum

value, are used in the analysis of collected data,

whereas except for the last hypothesis, the simple

first six hypotheses, and the comparison between the

computed and the tabulated f-value regarding the last

hypothesis. Underline this rule, the null hypothesis is

accepted when the computed t or f-value is less than

the corresponding tabulated one, where in opposite,

the null hypothesis is rejected when the computed t

or f-value, is higher than the tabulated. Another rule

is used in the decision of null hypotheses acceptance

or rejection, is the comparison between the computed

and the predetermined coefficients of significance.

Following this rule, the null hypothesis is accepted

and its alternative is rejected, when the coefficient of

significance is higher than the predetermined one,

and in opposite, the null hypothesis is rejected and its

alternative is accepted, when the computed one is

less than the predetermined. In occasion, both

decision criterion lead to the same decision.

equivalent to 5 percent coefficient of significance.

This hypothesis is initiated to enable testing whether

bank profitability affects liquidity. Profitability is

measured using ROA, where ROA is the ratio of net

income to total assets. Using its null form, the

hypothesis is listed again as follows.

Ho1. The profitability of the commercial banks of

Jordan does not affect the liquidity position of these

attributed credit amount to the preceding year from

the attributed credit amount of the most recent year,

and then dividing the result of subtraction by the

credit amount of the preceding or old year. The null

hypothesis is listed as follows.

Ho2. The rate of credit growth of commercial banks

of Jordan does not influence the liquidity of these

banks.

The test of the hypothesis reveals that R equals

0.020, and R2 equals zero. Because R2 equals , then

To enable testing whether client deposits affect

liquidity of commercial banks of Jordan, this

hypotheses is developed. The ratio of client deposits

R, and 0.045 value of R2. The value of R2 indicates

that client deposits explains 4.5 percent of the change

Financial leverage is measured through the

relationship of total liabilities to total equity. To test

the impact of leverage on bank liquidity, the fourth

hypothesis is initiated. The null hypothesis is

appearing below.

Ho4. The Jordanian commercial banks’ financial

leverage does not significantly affect the liquidity

position of these banks.

Capital adequacy is measured through the

relationship of total equity to total assets. The null

coefficient of correlation (R), and 0.089 coefficient

of determination (R2), where the value of R2 means

that capital adequacy of commercial banks of Jordan

explains 8.9 percent of the change in liquidity. Table