The effect of Islamic banks' profits distribution on the market value of shares in the secondary market (stock market)

Abstract

This study aimed to measure the impact of distributed profits on the market value of the share in Jordanian Islamic banks.  The study also tried to know the criteria for these profits, and the study also sought to measure the factors affecting the market value of shares, and it tried to measure the effect achieved from the distribution of profits of Islamic banks on the market value in the stock exchange. Where this study belongs to the quality of descriptive studies, and within that, the survey method was used on a sample of (150) individuals working in Jordanian Islamic banks, namely (Safwa Islamic Bank, Jordan Islamic Bank, Islamic International Arab Bank) using the questionnaire as a research tool. The study reached several results, most notably:

1.     The amount of retained earnings are the most important criteria for the distribution of profits.

2.     Inflation rate is one of the most important factors affecting the market value of the stock.

3.     There is a statistically significant impact of dividends on the market value of shares in Jordanian Islamic banks.

The study reached several recommendations, the most important of which are:

1.     The necessity of periodically conducting studies by Jordanian Islamic banks to know the factors that affect the market share price of it.

2.     The necessity for Jordanian Islamic banks to determine the share’s share of the distributed profits and its share of the retained earnings, to reach the appropriate distribution policy.

3.     The necessity for the Central Bank to take measures to limit the excessive retention of profits if there are no sufficient justifications for that.

Keywords: impact, dividends, market capitalization, Islamic banks.