The impact of financial intelligence on capital operating efficiency and its effect on profitability: Evidence from Jordanian banks

Abstract

This study aimed to demonstrate the impact of financial intelligence (capital adequacy, asset quality, and cash liquidity quality) on capital operating efficiency (return on investment of resources), and the effect of these variables on profitability maximization in Jordanian commercial banks listed on the Amman Stock Exchange (ASE). The study population consisted of all banks listed on the ASE, totaling 12 banks as of the end of 2024. The required data, specifically, the indicators of financial intelligence, capital operating efficiency, and profitability, were obtained from the financial statements issued by the ASE for the period 2020–2024. Multiple regression analysis was employed to analyze the data, test the hypotheses, and derive findings and conclusions. Prior literature has produced divergent and conflicting results: some studies have found a positive impact of financial intelligence on profitability, while others have argued the opposite regarding the impact of financial intelligence and capital operating efficiency on financial performance and earnings sustainability. The findings of this study contribute to this ongoing debate by providing statistical evidence that financial intelligence indicators (capital adequacy, asset quality, and cash liquidity quality) in ASE-listed commercial banks exert a strong impact on both capital operating efficiency and profitability indicators. Furthermore, financial intelligence indicators and capital operating efficiency were found to affect all profitability indicators, albeit with differing magnitudes. These findings call upon Jordanian commercial banks to recognize the importance of applying established financial intelligence strategies within the framework of capital operating efficiency. This is necessary to achieve acceptable profitability rates that enable banks to maintain their market presence, sustain their operations, strengthen their financial position, and increase their equity.