Banks` Performance and the Implications of Micro Risks - Empirical Study

The study aims to investigate the impact of risk factors on the performance of Jordanian commercial banks listed at Amman Stock Exchange - ASE, in addition to explore the mediating role of Asset-Liabilities Management in determining the performance of Jordanian commercial banks through micro risk factors based on a sample of 13 banks' data for 15 years from 2006 – 2020. Regression model was used as the study tool. The results indicated that, Jordanian commercial banks performance is significantly affected by micro risk factors in dissimilar direction. Liquidity risk influenced positively banks' performance, while the credit risk and operational risk affected negatively on the bank's financial performance. Finally, the Asset-Liabilities Management strategy improved the performance of Jordanian commercial banks by 20% to 25%. Subsequently, banks` healthy liquidity position should be sustained to enhance performance, and banks` management should focus more on adopting better approaches in order to constringe credit and operational risk. Additionally, as ALM contemplate a positive impact on financial performance, more concentration should be practiced by management on this technique in order to elevate financial performance to function as a cushion in future unexpected events.