Journal of Computer Science 8 (3): 374-381, 2012
ISSN 1549-3636
© 2012 Science Publications
Information Technology Role in Reducing
E-Banking Services Risk in Jordanian Banking Sector
1
Badi S. AL-Rawashdeh, 2Aymen M. Abu-Errub,
3
Ahmad Y. Areiqat and 4Mohammad Dbbaghieh
1
College of Business Administration, Princess Noura University, Saudi Arabia
2
Department of Computer Information Systems, Faculty of Information Technology,
3
Department of Business Administration, Faculty of Administrative and Financial Sciences,
4
Department of Accounting, Faculty of Administrative and Financial Sciences,
Al-Ahliyya Amman University Amman, Jordan
Abstract: Problem statement: This study aims to highlight the role of information technology in
reducing risk of electronic banking services in the Jordanian banking sector. The study was conducted
on three banks as a sample representative of the Jordanian banking sector. Approach: Data collection
was through conducting personal interviews with the operations managers in the three banks (HBTF,
JC Bank and Audi Bank). Results: The results showed that Jordanian banks showing highest attention
toward risk management of e-banking, through their commitment to Basel Standards on risk
management. Conclusion: Through the study, it will be clear that Jordanian banks committed to the
standards of the Basel committee on safety and security of electronic banking services. These banks
take into account all the potential risks before applying any system of electronic services. It is
irrefutable evidence on the banks of Jordan keenness on protecting themselves and their customers
from risk of theft through electronic means, the banks included their websites with detailed instructions
to ensure that no customer fall prey to hackers.
Key words: Results showed, risk management, Jordanian banks, information technology,
electronic banking, Jordanian banking, banking services, information system,
electronic banking services
administrative processes in various types, activities and
sizes of business organizations. It is not surprising that
any system, maybe surrounded by several types of risks
and these risks may be arising due to defects in the
system itself, or in how to use it, or the possibility of
storming by hackers.
Since the banks, are among the most business
organizations, that use information technology for the
launch of its electronic banking services, this study
aims to identify the means pursued by the Jordanian
banks to reduce these risks.
INTRODUCTION
Any scientific discipline consists of its properties,
its uniform and the terminology of Knowledge.
Therefore , the automated information systems consist
of the necessary equipment (Hardware) as property
and information contained in the system (Software)
and the terminology that help the user to access this
information (instructions).
In this sense, the information system acts as an
intermediary between business management and
computer science. In an age of advanced technology
which we live now, we find that a lot of business
organizations have become dependent on information
and communication technology in the management of
its business. And many of the stakeholders in these
organizations became tend to prefer to deal with these
organizations through technological means, because of
the savings in time, effort and money. All this led to the
growing role of information technology in all
Problem statement and questions: Although there are
many advantages to electronic banking services, but
there are number of clients of Jordanian banks are
reluctant to request of using them because they involve
various risks.
The study importance: The process of investment in
information technology for the production of banking
Corresponding Author: Aymen M. Abu-Errub, Department Computer Information Systems, Faculty of Information Technology,
Al-Ahliyya Amman University, Amman, Jordan
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J. Computer Sci., 8 (3): 374-381, 2012
services and the breadth of use, evidence on the
evolution of the banking sector. According to statistics
from the Association of Banks in Jordan, 2010, the
number of ATMS operating in the Kingdom has risen
to 1023 machines in 2009 compared to a 662 in 2005.
The importance of this study lies in that it highlights the
most important risks associated with electronic banking
transactions, whether suffered by the bank or customer
and procedures followed by the Jordanian banks to
reduce these risks.
study concludes that the majority of Jordanian banks
have there own internet-sites, and that the number of
clients who are using internt banking services is
increasing. The study draw the attention to the
increasing needs for the new E-Banking services due
the new clients needs. The study recommend the
following:
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The study objectives: This study aims at the following:
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To identify the risks of electronic banking services
from the customers point of view and the bank
point of view
To identify precautionary measures imposed by the
banks of Jordan to electronic transactions in order
to avoid risks
Contribute to the submission of proposals, which
may help in reducing these risks
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Increasing and propagating awareness of EBanking and promotion campaigns to aware
clients of Internet banking advantages and
feasibility through reducing time, effort and cost
Expanding E-Banking establishing and enhancing
banks ability to provide executive banking
services under the phenomena of banking merge
and comprehensive banks
Holding training courses for bank’s employees to
understand E-Banking business to achieve the
desired objectives
A Research by Adeosun et al. (2009), “Strategic
Application of Information and communication
Technology for Effective Service Delivery in Banking
Industry”, emphasized on the advantages and
disadvantages of using digital ICTs in banking
activities. The research results that solving complex
problems in banking requires the expertise knowledge
of several individuals scattered all over the remote areas
of the world. The banks
Igau et al. (2011) in there research: “NonBusiness E-Commerce in Malaysia: An Investigation
of Key Adoption”, study the application of ECommerce by profit oriented organization. The
research stated that understanding the key factor of
facilitating and adopting the e-commerce in nonbusiness are still need enrich. The researh focus on
the reason of rejecting new technology. The
researchers collect data from 65 schools, centers and
units from 5 public universities in Kota Kinabalu and
Kuala Lumpur. The research result implies that the
non-business sector should look into advantages,
network orientation and information efficiency as a
strategic based form implementing e-commerce in
more effective manner to achieve there objectives.
Study by Jimenez and Roman (2005) under the
title: “Case Study on Philippines: Electronic
Banking: Delivering Micro finance Services to the
Poor in the Philippines”.
The study aimed to provide a brief overview of the
microfinance industry in the Philippines. The study was
conducted by the style of the case study of two types of
electronic banking services that can be used by those
borrowers to repay their loan installments. First, is the
MATERIALS AND METHODS
Implementation of this study was based on qualitative
data obtained through personal interviews conducted by
the researcher with the operations managers in three
Jordanian banks to identify the electronic banking
services offered by these banks and the types of risks
that accompanied the provision of such services, as
contact was made with a number of clients of these
banks to identify the electronic banking services they
use and whether their bank accounts have been
subjected to any risks.
The study population and sample: The banking sector
in Jordan is the study population represented by the
Housing Bank for Trade and Finance, Jordan
Commercial Bank and Bank Audi as a sample, in
addition to 30 of the clients of these banks.
Literature review: Literature contains many research
and studies related to the electronic banking services
and associated risks.
A research by Siam (2006) titled “Role of the
Electronic Banking Service on the Profits of Jordanian
Banks” studied the effects of E-Banking on banking
profiability in Jordan. The study also compares between
banks services and profits before and after E-Banking
technology revolution and the new challenges facing
the banking sector.
The study investigates the reasons behind
providing E-Banking services through Internet. The
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J. Computer Sci., 8 (3): 374-381, 2012
will help bankers to control and monitor these
services around the world.
A study under the title: “How Dangerous is
online Banking.” This study aimed to review some
cases of theft from the accounts of certain customers
of U.S. banks and measures implemented by the
banks to protect depositors funds, where the
researcher indicates that one of Bank of America
clients lost from his account the amount of $90000,
this happened by a malicious virus had infected his
computer, enabling a hacker to capture his user name
and password and transfer the amount from his
account. In his attempt to overcome these situations,
Bank of America recently introduced the safe pass
card, a wallet-sized card embedded with a button
that, when pressed, sends the customer a six-digit
security code via text message. Then the customer
can enter the code along with his user name and
password to access an online account.
A study by Al-Haj and Abu-Errub (2008),
”Perfrmance Optimization of Discrete Wavelets
Transform Based Image Watermarking Using Genetic
Algorithms”. Introduces a novell techniqe to use
watermarking in icreasing the security of using Internet,
by securing the ways of copyright protection and
ownership validation.
The study pointed out that the widespread of using
Internet and the continuous advancements in computer
technology have facilitated the unauthorized
maniupulation of digital content. The researchers
introduce new technique using genetic algorithm and
DWT, and challenges that the new technique increases
the security of using Internet by preventing an uthorized
using of transmitted data.
use of mobile telephones through the Short Messaging
Services (SMS) to pay for microfinance loan
amortizations using electronic Cash platforms. The
other case is the use of Automated Teller Machines
(ATM) Cards, which aims to lower costs for the
microfinance institutions while increasing convenience
for the clients. In order to reduce the risks of using any
of the methods, the Philippine Central Bank (BSP)
Bangko Sentral Philippine responded to the decisions of
Basel Committee and issued the following legislations:
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Banks should provide a written memorandum to
the central Bank, asking for introduction or
development of an electronic service and that this
memo must be signed by the president. The request
must include, the action by the bank to ensure the
security of this service, such as
An adequate risk management process is in place
to assess, control, monitor and respond to
potential risks arising from the proposed
electronic banking activities.
A manual on corporate security policy and
procedures exists that shall address all security
issues affecting its electronic banking system.
The system had been tested prior to its
implementation and that the test results are
satisfactory
A study by Sanayei and Noroozi (2009) under the
title. “Security of Internet Banking and its Linkages
with users’ Trust: A Case Study of Parsian Bank of Iran
and CIMB Bank of Malaysia”. The study aimed at
exploring the linkage between the security and trust in
internet banking. The researchers have investigated the
users of Parsian Bank of Iran Isfahan Province and
CIMB Bank of Malaysia-Kuala Lampur. Due to the
nature of internet banking that occurs in the web
network, not face to face, expected security is very
important, the results showed a positive correlation
between the two variables security and trust.
A study under the title “Internet Banking” the
study aimed to identify the banking services through
internet in India and the security risks that may face
these services. The author believes that security risk
arises on account of unauthorized access to a bank’s
critical information stores like accounting system, risk
management system, portfolio management system.
There are other important risks such as loss of
reputation and violation of customer privacy and its
legal implications. Therefore, the Basel Committee on
Banking Supervision has taken the lead in this area.
The major tasks of EBG’s work has been to develop
risk management guidance for internet banking that
Theoretical background:
Electron banking services: Electronic
services consist of the following:
banking
Automated teller machines: The electronic banking
has enabled the customers to have access to the cash
from the banks round the clock through ‘Automated
Teller Machines’ (ATM). These machines are installed
not only within the premises of the banks but also
additionally at various market and common places of
importance and convenience to customers. The ATM
not only provides access to get ‘All Time Money’ but
also facilitates universal withdrawal of money any time,
any place’. Regardless of customer’s affinity of
accounts with any bank, the customers can withdraw
money from ATM’s at any time and at any place in the
country by the use of their ATM cards.
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J. Computer Sci., 8 (3): 374-381, 2012
The function can be used to:
Numerous other banking services emerging from
the application of information technology in the banks
of Jordan and have been provided to the customers are
discussed below.
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On-line banking services: On line banking allows the
customers to perform some specific banking facilities
without requiring the customer’s physical presence at
the bank. It enables the customer to perform all routine
transactions through their traditional banks; such as:
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Customer who elects and sign-up to use the transfer
function, has to designate the transfer amount, from and
to accounts and when one wants the transaction to
occur, i.e., now or on a future date. Some banking sites
also offer an ~rray of transfer tools that allow one to set
or change recurring transfers, check the status of a
transfer, cancel a pending transfer and receive a transfer
alert via e-mail when the transfer clears.
View account balances
Access account history
Transfer of funds between accounts
Schedule future transfers
Pay bills
Schedule automatic recurring bill payment
Very few banks through their on-line banking sites
also offer the following capabilities:
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Transfer money between accounts within one’s
bank
Make a payment on a loan within one’s bank
Take an advance on one’s bank credit line
Wire money to one’s account at another bank
Transfer money from one’s account at another
bank to one’s account within the bank
Trade securities: This function, provided by Jordan
banks, provides the authorized use of the site to
purchase, redeem or exchange equity shares through the
banks securities subsidiary.
This function can be used to:
Account aggregation: View balances and market
values of on-line accounts held at other institutions,
including investments, credit cards
Send payments to individuals via e-mail
Trade stocks and mutual funds
Track real time stock quotes
Receive trust and stock statements on-line
View images of bill statements, cheques and
deposit slips
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Purchase trade securities from one’s bank’s funds
by transferring money from an account
Redeem fund shares via transfer into a deposit
account
Exchange shares between fund accounts
Transfer from a brokerage account and a secondary
bank account
Large banks of Jordan as well as foreign banks
offer fully secure, fully functional online banking for
free or for a small fee. Some smaller banks offer
limited access, for example, one may be able to view
only one’s account balance and history but not initiate
transactions online. Sooner than later, as more banks in
Jordan succeed online and more customers use their sites,
fully functional online banking likely will become as
commonplace as automated teller machines in the country.
When a customer signs up for online banking and
designates the account to access online, the customer is
issued a .user ID and a temporary password via regular
mail or e-mail or both, with instructions on how to use
them to access the secure online banking portion of
one’s bank site where one’s account information is
available 24/7.
Paying bills online: Today, more and more banking
sector in Jordan is offering this free as an online
service on one’s banking site. One only needs to
register the accounts OI; le wishes to pay from and
the Payee’s account one wishes to pay to. Enter the
account information once only and one’s private
banking site will keep those accounts available until
one removes them. One can always change the
accounts from which one wishes to pay one’s bills
and add more payees as needed. One also is given
the opportunity to receive one’s bills online.
An increasing number of larger national banks as
also foreign banks in Jordan now offer electronic
billing, or e-bills and accept e-payments.
Electronic Fund Transfer (EFT): Computerized
electronic fund transfer services are common place in
Jordan banking sector. EFT uses computer and
electronic technology as a substitute for cheques and
other studys transactions.
Electronic payments: The most common mode of
payment, especially for low value purchases, is by cash.
However, in modem age of information technology,
customer feels convenient to pay for high value
purchase through electronic payment technology.
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J. Computer Sci., 8 (3): 374-381, 2012
certificate, signature and cheque, attaches his deposit
slip and public key certificate, encrypt and send it to his
bank. The vendor’s bank checks the signature and
certificate and send to the clearing house. On clearance,
the amount is credited to vendor’s account and credit
advice sent. The purchaser gets a debit advice.
Banking sector in Jordan, like their counterparts in
other countries, offer e-payment services for their
customer’s open market purchases. The most popular
form of electronic payments is by credit or debit cards.
Credit cards: Currently, on line shoppers use credit
cards for a majority of their internet purchases. Banks
issue credit cards to their customers. A credit card has a
preset spending limit based on the user’s credit limit. A
user can pay off the entire credit card balance or pay a
minimum amount each billing period. Credit card
issuers charge interest on any unpaid balance.
Electronic wallet payments: The electronic wallet
serves function similar to a physical wallet, holds credit
cards, electronic cash, owner identification and owner
address information at an electronic commerce sites
check-out counter. Electronic wallets make shopping
and payments more convenient. The customer clicks on
items to purchase and then click on their electronic
wallet to order the items quickly Alrawahdeh (2010).
Debit cards: Debit cards are issued by the banks for
use by customers for their commercial transaction in
much the same way as a credit card. But fewer sites of
banks in Jordan offer the facility to use debit cards.
Debit cards are not appropriate for small
transactions and do not afford anonymity. The major
problem with the debit cards is that they are very less
secured than the most commonly used credit cards.
Electronic banking services provided by bank in the
study sample:
Bank audi: When conducting the interview with the
operations manager in Bank Audi, the researcher has
asked the following question: what are the electronic
services that you provide to your customers and how do
you ensure their integrity from the risk?
The answer was that Bank Audi provides the
services of Automated Teller Machine services
which include:
Smart cards: The smart card is the latest addition in
the application of information technology in the
banking sector of Jordan. The card promises secure
transactions using existing infrastructure. Smart cards
are credit/debit cards and other card products (health
insurance cards, employee or student identification
card, driving license card,) enhanced with
microprocessors capable of holding more information
than the traditional magnetic strip cards. Smart cards
can hold significantly greater amount of data almost
hundred times more than the magnetic strip cards.
Smart cards are also not exposed to external physical
damages. But they are more expensive to issue.
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Electronic cheque payments: Electronic cheques are
another popular form of payment. Most of the cheques
based transactions are usually held between business
and are practicable where the business organization is
willing to invest in speqial hardware (normally an
electronic circuit attached to a P.C.) to sign payments.
Hardware encryption of the signature is secure as it will
be difficult for hackers to steel keys stored by
certification agencies. It is also assumed that banks
have trusted relationship among them and the clearing
house which settles the cheque payments.
The purchaser fills an order form, attaches payment
advice (i.e., electronic cheque), signs it with his private
key using his signature hardware, attaches his public
key certificate, encrypts it using the vendor’s public key
and sends it to the vendor. The vendor decrypts the
information using his private key, check buyer’s
Cash/ Cheque deposit
Direct cash deposit
Cash withdrawal
Balance inquiry
Internal transfer between accounts
Cheque book request
Mini statement request
Change pin number
Audi online required from the customer to fill his
custom ID and user ID and password. This service
enables the customer includes many services such as:
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Viewing the account summary
Creating new fund transfer requests
Modifying pending transfer requests
Deleting pending transfer requests
Bill
payment
and
many
(www.banqueaudi.com)
others
Also the bank issues credit cards for customers and
SMS alert on the mobile to notify the customer about
checks that will be removed from his account and to
confirm the withdrawal. In order to overcome potential
risks Bank Audi is using the social engineering as a
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J. Computer Sci., 8 (3): 374-381, 2012
technique used to manipulated people into performing
actions or divulging confidential information by
tricking or misleading them to bypass security measures
and tools. For example, Bank Audi asking his clients to
beware that it is not the practice of Bank Audi to ask
clients to update or verify their personal details by
email and if the client received such emails he must
simply delete them.
transactions such as bill payments to third party using
HBTF website (www.hbtf.com).
The operations manager in the HBTF pointed out
that the bank has published the security tips on its
website, these tips include the following:
The housing bank for trade and finance: The
Housing Bank for Trade and Finance was at the
forefront of Jordanian banks in the application of
various technological techniques to save time and effort
to its customers. The customer can enjoy the following
benefits through using the electronic services:
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Convenience while conducting several banking
transactions such as bill payments, money transfers
and buying products
There is no need to customers for waiting the
branch opening to conduct several activities
because of the a availability of the alternative
electronic means all the time
Absolute confidentiality and security on all
transactions made through e-channels
Convenience in managing accounts whenever and
wherever customers are
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And an increase in the bank’s Keenness to avoid
the risk of theft of customer accounts by hackers, the
bank has lowered the ceiling of cash withdrawals from
ATMs to 500 dinars a day. And the bank adopted other
means safer than only enter pin number for the client,
but means like fingerprint and iris of the eye.
The operations manager also pointed out that
HBTF applies all the principles of electronic banking
risk management issued by Basel Committee. The most
important principle says that “E-banking data and
systems should be classified according to their
sensitivity and importance and protected accordingly.
Appropriate Mechanisms, such as encryption, access
control and data recovery plans should be used to
protect all sensitive and high-risk e-banking systems,
servers, databases and applications.
The bank has succeeded in developing highly
competent e-channel services in order to meet the
different needs by customers, through the availability of
e-channels (24/7), they include the following:
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Select a password that is difficult for to guess, do
not associated your password with personal events
such as birthday or others
Change the password from time to time
Keep the banking information (password, credit
card number and so on), confidential and do not
record them any where
Do not respond to any email or call asking for
personal information, because HBTF will never ask
you for such information
The customer can view the security certificate
before entering user name and password
ATM
Iskan SMS
Iskan online
E-payments
Call centre
Phone bank
Virtual bank
Kiosks
Jordan commercial bank: The electronic channels of
Jordan Commercial Bank include.
SMS banking which enable the customer to
manage his account through SMS Push messages and
Pull Messages, SMS push messages provide the
customer with:
RESULTS AND DISCUSSION
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The Housing Bank for Trade and Finance has now
over 164 ATM machines distributed in different
locations across the Kingdom providing a variety of
comprehensive banking services. In addition to the
availability of mobile ATM van on all days even in
weekends and official holidays. Moreover, the customer
can receive messages on his mobile phone about
transactions on his account in anytime and anywhere,
also the customer can perform online banking
Account balance notification
Salary transfer notification
Several other advanced services
SMS Pull messages allow the customer to:
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379
Money transfer between accounts within bank
branches
Money transfer to a third party within bank
branches
J. Computer Sci., 8 (3): 374-381, 2012
•
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committee on safety and security of electronic banking
services. And that these banks take into account all the
potential risks before applying any system of electronic
services. It is irrefutable evidence on the banks of
Jordan keenness on protecting themselves and their
customers from risk of theft through electronic means,
the banks included their websites with detailed
instructions to ensure that no customer fall prey to
hackers.
Stopping a check
Several other advanced services
Phone banking: It is a free electronic feature that
enables client to manage his accounts with the bank via
phone and includes the following services:
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Account balances inquiry
Money transfer between accounts within bank
branches
Money transfer to third party within bank branches
Recommendations: The researcher offers the
following suggestions to the banks that could reduce the
risks of electronic banking transactions:
E-statement: The customer can receive his account
statement from JC Bank via e-mail whenever and
wherever he wants.
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ATM NetWork: ATM services include:
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Cash withdrawal in Jordanian Dinars and in
Dollars
Cash and check deposits
Mini or detailed account statement
The ability to transfer money between the customer
accounts
within
bank
branches
(www.jcbank.com.jo)
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In providing protection to its clients, according to
director of operations in Jordan Commercial Bank that
the bank has the unprecedented step in this regard,
which send SMS messages to inform them about the
existence of checks drawn on their accounts of more
than 1000 dinars to make sure that the check is not
forged or stolen.
Moreover, in order to develop customer service
according to more secure standards, the bank recently
launched the Iris Recognition System in Some of its
branches to perform all financial transactions without
the need to use the personal identification card for the
customer. And this system comes as a respond to
reduce the counterfeiting, monument and hacking
operations, also the application of security systems are
evidence of the bank commitment to Basel Principles.
The operations manager in the three banks
indicated that they did not happen to any attempts by
hackers to steal funds from customer accounts.
The researcher addressed questions for over 20 of the
banks’ customers, according to one of the ladies, that
she lost her handbag which keeps the ATM card and the
password and before telling the bank, some money had
been stolen from her account.
To instruct each bank to develop its own program
(Software), to resist the virus and the customer can
download it for free
To put a limit to the validity of PN number given to
the client, for example three months, forcing the
client to change it periodically
Supply shops that accept credit cards with hidden
cameras to film the card user
Meaningful communication with customers to get
feedback on them about the problems arising
electronic banking
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10.3844/jcssp.2008.834.841
Alrawahdeh, B.S., 2010. A study of auditing practices
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Igau, O.A., A.W.M. Kassim, S. Tahajuddin, N.O.
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CONCLUSION
Through the study, it is clear that the Jordanian
banks are committed to the standards of the Basel
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