Determinants of Profitability: Evidence from Brokerage Companies Listed at Amman Stock Exchange

Abstract

This paper examines the factors determining the profitability of the brokerage companies (Brokers) listed at Amman Stock Exchange during the period from 2013 to 2017. The profitability of brokerage companies is measured by Return on Assets (ROA) as a function of broker specific and macroeconomic determinants. Simple regression was also used to analyze the data, examine the relations, and measure the effect of determinants on brokerage companies’ profitability. The findings revealed that assets quality and Capital adequacy have a positive and significant impact on broker profitability. Furthermore, the results of the study show that broker size has a negative (inverse) impact on broker profitability, while the analysis of macroeconomic variables records that economic activity measured by inflation and Gross Domestic Product (GDP) has no effect on brokers’ profitability.