The efficiency of the use of loan capital by jordanian banks

Abstract

The article is devoted to the efficiency of the use of loan capital by the Jordanian banks. The article shows the character of the movement and a form of the monetary value of the loan capital. It shows the relationship and differences of the loan capital from loan and credit. It shows that loan interest is an integral part of the loan capital – monetary capital, bringing the loan interest and exacted by the owner of capital from the borrower as a reward for providing it in a form of a loan for a period. The article also shows that the share of loan capital of Jordanian banks in some years exceeded 3/4 of their liabilities and, accordingly, the value of assets. During the studied period (2009–2015 years) the share of loan capital increased from 71.8% to 76.1% and nearly twice as many loans were issued by them, which allows the make conclusion about underutilization of the Jordanian banks of the loan capital created by them. However, the increase in the volume of granted loans allows the Jordanian banks to increase the total amount of interest received (with the same amount of interest paid), interest margin, and, accordingly, increase the return and the efficiency of the use of loan capital. Under such conditions it should be noted that today there is the prospect of more efficient use of loan capital by the Jordanian banks.