Financial Performance Divergence Across Sectors: An Empirical Study Of Jordanian Banks And Non-Banks

Abstract

This study investigates whether sectoral classification Bank versus Non-Bank significantly influences two critical financial performance indicators: Return on Equity (ROE) and Return on Assets (ROA) among Jordanian listed companies. Using 2023 data from 20 firms on the Amman Stock Exchange, the research applies one-way Analysis of Variance (ANOVA) and Tukey HSD post hoc tests to assess sectoral differences in profitability and operational efficiency. The results reveal a borderline significant difference in ROE (p = 0.0512), with Non-Banks exhibiting marginally higher profitability than Banks. This may be attributed to differences in regulatory burden, capital structure, and operational flexibility. Conversely, no significant difference was found in ROA (p = 0.3918), suggesting that asset utilization efficiency is relatively uniform across sectors, potentially due to shared macroeconomic pressures, evolving IFRS compliance, and similar institutional constraints in Jordan. These findings carry audit relevance. The borderline ROE variation hints at differential risk-return dynamics that could inform auditor skepticism or assurance level. However, the absence of significant ROA variation implies that auditors may not rely solely on profitability metrics when forming opinions. Instead, governance transparency, regulatory adherence, and auditor characteristics likely play a more pivotal role. Drawing upon Agency Theory and Signaling Theory, this study highlights the nuanced role financial ratios play in audit contexts within emerging markets. The implications are relevant for auditors, regulators, and stakeholders seeking to interpret financial health beyond conventional ratio analysis in environments characterized by regulatory transformation and institutional evolution.