Capital expenditure, tax avoidance and bank performance: Evidence from Jordanian banks
Tax avoidance and capital expenditure are critical financial strategies employed by banks to enhance profitability. Understanding their impact on bank financial performance is essential for policymakers and bank managers seeking to optimize financial strategies. This study is aimed to investigate th...
Saved in:
| Main Authors: | , , , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
LLC "CPC "Business Perspectives"
2024-07-01
|
| Series: | Investment Management & Financial Innovations |
| Subjects: | |
| Online Access: | https://www.businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/20499/IMFI_2024_03_Shubita.pdf |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| _version_ | 1832543631176630272 |
|---|---|
| author | Mohammad Fawzi Shubita Nahed Habis Alrawashedh Duaa Fawzi Shubita Ahmed Dheyauldeen Salahaldin |
| author_facet | Mohammad Fawzi Shubita Nahed Habis Alrawashedh Duaa Fawzi Shubita Ahmed Dheyauldeen Salahaldin |
| author_sort | Mohammad Fawzi Shubita |
| collection | DOAJ |
| description | Tax avoidance and capital expenditure are critical financial strategies employed by banks to enhance profitability. Understanding their impact on bank financial performance is essential for policymakers and bank managers seeking to optimize financial strategies. This study is aimed to investigate the influence of tax avoidance (TAV) and capital expenditure on the financial performance of Jordanian banks, while exploring the moderating effect of firm size. Using regression analysis, the relationships between tax avoidance, capital expenditure, bank size, and bank financial performance were investigated. Financial data from Jordanian banks were utilized over a specified period. The study results refer that tax avoidance has a positive correlation with ROA (the correlation = 31.7%) and ROE (the correlation = 30.2%). The results reveal that tax avoidance significantly impacts bank financial performance, with banks employing tax avoidance strategies exhibiting higher returns on assets and equity. However, capital expenditure does not demonstrate a significant association with bank financial performance. Additionally, firm size does not moderate the link between TAV, capital expenditure, and bank financial performance. The non-significant impact of capital expenditure underscores the need for banks to explore alternative avenues for improving financial performance. These findings provide a valuable insight for policymakers and bank managers in devising effective financial strategies to optimize bank performance in the Jordanian context. |
| format | Article |
| id | doaj-art-478435c5a5984bc8bd5f82017e181fe3 |
| institution | Kabale University |
| issn | 1810-4967 1812-9358 |
| language | English |
| publishDate | 2024-07-01 |
| publisher | LLC "CPC "Business Perspectives" |
| record_format | Article |
| series | Investment Management & Financial Innovations |
| spelling | doaj-art-478435c5a5984bc8bd5f82017e181fe32025-02-03T11:37:15ZengLLC "CPC "Business Perspectives"Investment Management & Financial Innovations1810-49671812-93582024-07-0121312413410.21511/imfi.21(3).2024.1120499Capital expenditure, tax avoidance and bank performance: Evidence from Jordanian banksMohammad Fawzi Shubita0https://orcid.org/0000-0001-7389-2108Nahed Habis Alrawashedh1https://orcid.org/0000-0001-8810-3706Duaa Fawzi Shubita2https://orcid.org/0000-0002-6333-8784Ahmed Dheyauldeen Salahaldin3https://orcid.org/0000-0003-2009-7762Ph.D., Professor, School of Business, Department of Accounting, Amman Arab University, JordanPh.D., Associate Professor, School of Business, Department of Accounting, Amman Arab University, JordanFinance Instructor, University of Jordan, JordanAssistant Professor, Department of Marketing, Faculty of Business, University of Anbar, IraqTax avoidance and capital expenditure are critical financial strategies employed by banks to enhance profitability. Understanding their impact on bank financial performance is essential for policymakers and bank managers seeking to optimize financial strategies. This study is aimed to investigate the influence of tax avoidance (TAV) and capital expenditure on the financial performance of Jordanian banks, while exploring the moderating effect of firm size. Using regression analysis, the relationships between tax avoidance, capital expenditure, bank size, and bank financial performance were investigated. Financial data from Jordanian banks were utilized over a specified period. The study results refer that tax avoidance has a positive correlation with ROA (the correlation = 31.7%) and ROE (the correlation = 30.2%). The results reveal that tax avoidance significantly impacts bank financial performance, with banks employing tax avoidance strategies exhibiting higher returns on assets and equity. However, capital expenditure does not demonstrate a significant association with bank financial performance. Additionally, firm size does not moderate the link between TAV, capital expenditure, and bank financial performance. The non-significant impact of capital expenditure underscores the need for banks to explore alternative avenues for improving financial performance. These findings provide a valuable insight for policymakers and bank managers in devising effective financial strategies to optimize bank performance in the Jordanian context.https://www.businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/20499/IMFI_2024_03_Shubita.pdfbanking performancebanking sectorcapital expenditureemerging economiesfinancial institutionsfiscal efficiency |
| spellingShingle | Mohammad Fawzi Shubita Nahed Habis Alrawashedh Duaa Fawzi Shubita Ahmed Dheyauldeen Salahaldin Capital expenditure, tax avoidance and bank performance: Evidence from Jordanian banks Investment Management & Financial Innovations banking performance banking sector capital expenditure emerging economies financial institutions fiscal efficiency |
| title | Capital expenditure, tax avoidance and bank performance: Evidence from Jordanian banks |
| title_full | Capital expenditure, tax avoidance and bank performance: Evidence from Jordanian banks |
| title_fullStr | Capital expenditure, tax avoidance and bank performance: Evidence from Jordanian banks |
| title_full_unstemmed | Capital expenditure, tax avoidance and bank performance: Evidence from Jordanian banks |
| title_short | Capital expenditure, tax avoidance and bank performance: Evidence from Jordanian banks |
| title_sort | capital expenditure tax avoidance and bank performance evidence from jordanian banks |
| topic | banking performance banking sector capital expenditure emerging economies financial institutions fiscal efficiency |
| url | https://www.businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/20499/IMFI_2024_03_Shubita.pdf |
| work_keys_str_mv | AT mohammadfawzishubita capitalexpendituretaxavoidanceandbankperformanceevidencefromjordanianbanks AT nahedhabisalrawashedh capitalexpendituretaxavoidanceandbankperformanceevidencefromjordanianbanks AT duaafawzishubita capitalexpendituretaxavoidanceandbankperformanceevidencefromjordanianbanks AT ahmeddheyauldeensalahaldin capitalexpendituretaxavoidanceandbankperformanceevidencefromjordanianbanks |