No abstract

Following the 2008 global financial crisis, and in common with many stock markets around the world, the Amman Securities Exchange (ASE) experienced some heavy losses. However, what makes the Jordanian market probably different is its inability to recover. The weighted price index fell from 7519.3 points in 2007 to 5520.1 points in 2009, to 4593.9 points in 2012, and to 4336.7 points by the end of 2013 respectively. With a statutory minimum tick which is equal to one pence, this observation has some serious implications to the liquidity cost that prevails in the Jordanian capital market, and the cost of financing listed firms. The primary aim of this research paper is to examine the impact of the stock market crash in Jordan on liquidity cost. Based on a total number of 108 listed stocks and daily data during the years 2007 and 2009, the empirical results indicate that liquidity cost on the Jordanian capital market is high. In addition, the results show that the 2009 stock market crash has led to a substantial increase in liquidity cost. In other words, the market must consider a number of remedial measures to improve its' operational efficiency.

This paper investigates the relationship between worker remittances and economic growth in a small country with volatile macroeconomic conditions (namely, Jordan). Previous research determines three main channels through which the impact of remittances can be transmitted: labor supply, capital accumulation and investment, and productivity. A historical behavior of these variables since 1976 to 2016 is analyzed and discussed in the context of the Jordanian economic structure. The Autoregressive Distributed Lag (ARDL) model that allows economic growth (measured by growth in per capita GDP) and financial development (measured by bank credit) to be affected by their lagged values and by current and lagged values of remittances (measured by remittances as percentage of GDP) is used to test for equilibrating and long-term associations between remittances and economic growth and financial development indicators. The results show that although Jordanian worker remittances represent a vital source of financial flows, they are not used to smooth consumption by receiving households and have no impact on economic growth or financial development. Instead, they lead to increase in imports and trade deficit. Thus, if reverse migration of Jordanian workers takes place, it will lead to sudden increase in skilled labor supply, which will exacerbate Jordan's unemployment problems.

In the framework of the financial and stock market literature, several economic concepts have been developed and considered including the concept of operational efficiency of stock markets. Basically, an efficient and liquid market permits investors to obtain the executed orders as fast and at reasonable prices as possible. This study provides answers for two major questions. The first question is what are the costs of liquidity which prevail in both Dubai and Abu Dhabi capital markets? Secondly, has the reduction in March 2000 in the minimum tick size in Dubai capital market led to a development in the operational efficiency of the capital market? Using data for an overall of 22 institutions which are listed on both markets and also based on a daily basis through the period from the first of October 2009 till first of August 2010, the practical investigations point out that liquidity cost in both markets is quite high. In addition, the outcomes obviously show that the decrease in the minimum tick size of the listed corporations on Dubai Capital Market have led to the preferred goal which is decreasing the cost of liquidity.

As a major part of the Jordanian financial system, this paper examines the banking sector at both the macro and micro levels. Based on the time period 1982-2015, and time series methodologies (co-integration, Vector Error Correction Model, and Granger Causality), the macrolevel analysis examines the impact of foreign exchange deposits on financial development. Using the Seemingly-Unrelated Regression (SUR), the micro-level aspect examines the impact of foreign exchange deposits and retail banking on the performance of banks in terms of their net interest margin and accounting performance. Finally, the fact that greater financial inclusion promotes credit to the private sector, we estimate an Ordered Probit Model to examine the determinants of financial inclusion in Jordan. We conclude that foreign exchange deposits reflect weak evidence in explaining the variability of bank credit. In other words, foreign exchange deposits do not promote financial development. The micro-level analysis, on the other hand, reveals that foreign exchange deposits and retail banking impact bank profitability in a positive manner. However, this impact (positive) comes only at the expense of widening net interest margins. Finally, the results reveal that higher income, better education, being a man, and being older are associated with greater levels of financial inclusion. Naturally, based on the empirical results, the paper outlines a number of recommendations whose aim is to promote financial development as well as the performance of the banking system.