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The Role of Corporate Governance on the Reduction of the Global Financial Crisis Implications: Evidence from Banking Sector of Jordan

Author(s): Mo'taz Amin Al-Sa'eed

Journal: International Journal of Business and Management
ISSN 1833-3850

Volume: 7;
Issue: 5;
Date: 2012;
Original page

This study aims to determine the role of Corporate Governance on the reduction of the global financial crisisimplications on the Banking Sector of Jordan; in addition to that, it aims to review the latest CBJ regulation anddirections which were issued during 2009 in order to motive the Jordanian Banks to expand the credit andlending to the public. In this study the researcher has used the CG Codes Pillars for Banks, and the monthlyreports issued by CBJ. In order to reach the desired results, a postal questionnaire was sent to all of the riskmanagers and internal audit managers operating in the Jordanian Banks. The research results show that ourrespondents have good level of education and experience, a multiple regression test was carried out to test therelationship between the independent variables: Commitment to Corporate Governance, Functions of the Boardof Directors, Board Committees, Control Environment, and Transparency and Disclosure codes, and thedependent variable: Reduction of the global financial crisis implications.; independent variables are able toexplain nearly 77% (R=0.765 P< 0.000) of the variance in Reduction of the global financial crisis implications,also it was found that calculated F = 32.675 is significant at 0.05 which means that there is an effect ofindependent variables on dependent variable. This indicates that there is a significant positive relationshipbetween independent variables and (dependent variable). Thus, we reject the null hypotheses that assumed thereis no significant role of independent variables. Meanwhile the coefficients factors and (T value at 0.05 level ofsignificant) support this suggestion when taking the independent variable jointly, By using the Stepwise analysis,the study has found that the most independent variable which plays the effective role on the reduction of theglobal financial crisis implications was the Transparency and Disclosure Pillars with (R = 0.657). The study hasfound that the economy does not get the expected benefits from CBJ regulation. This study like other crosssectional studies is not free of limitations.
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