The Impact of Capital Risk on the Financial Performance of the Jordanian Islamic Banks According to Basel (2) during the Period (2007 ? 2013)

This study aims at identifying the impact of capital risks on return on all assets, equity rights, and the return per share according to Basel (2). It also aims to identify the impact of capital risks on Tobin's-Q ratio for Jordanian Islamic banks according to Basel (2). The researchers used the descriptive analytic method, and the sample of this study was limited to Jordan Islamic Bank, and Islamic International Arab Bank during the period (2007-2013). The results reveal that there is a statistical significant impact of capital risks on return on assets, equity rights, one share, and Tobin's-Q ratio for Jordanian Islamic banks according to Basel (2). The increment of capital adequacy ratio over the ratio prescribed by Basel (2) has led to reduction in the return ratio on the previous variables. The study recommends the need for the Jordanian Islamic banks to search for new investment tools which enable them to employ the excess liquidity. They also should be involved in long-term investments instead of short-term investment.