Economic and Differential Factors of Financial Performance and their Impact on Market Value Added to Jordanian Commercial Banks

The purpose of this study is to examine the effect of the economic factors (Gross Domestic Product, Inflation, and Interest rate) on the added market value. The impact of these factors is studied in the light of the different of factors characteristic of financial performance (factors resulting from analysis of the financial performance indicators) collectively and individually. For the purpose of testing the study, the data variables were collected through the annual financial reports of the Central Bank of Jordan and the annual financial statements of commercial banks of Jordan (the study sample) for the period between 2005-2014. Based on the empirical evidence, the results showed a great significant effect of the study variables collectively where R2 showed (70) of the change in the added market value. While results showed a poor effect of each of the factors (economic factors, and distinguishing factors of financial performance) individually. Based on these results, the study presents a set of recommendations. The most important of which were the need to offer Jordanian commercial banks with the necessary orientation to use the standard market value added as one of the criteria for evaluating the strategic financial performance of the banks in the long term, and also the need to have harmonization between economic financial factors and differential factors of financial performance to be able to predict the current and future strategic financial performance.