The Relation between the Financial Market Development and Economic Growth in Jordan

Alaa Aldweik, Shatha Abdul-Khaliq, Hana Jaradat


The purpose of this study is to examine the relationship between economic growth and financial market development in Jordan through the co-integration and error correction model between during the period 2000-2018. The study employs the error correction model to determine the short-run dynamics of the system and the cointegration test to examine the long-term relationship . The study is limited to a few variables, changes in real Gross domestic product GDP and the IMF indicator for financial market development . The results show that in the long-term there is a significant relationship between economic growth and financial market development for Jordan data., while in the short-term there is no statistically significant relationship between the stock market development and economic growth. Furthermore, causality is going from economic growth to financial market development, not vice versa.

Keywords: Economic Growth, financial market development, Amman stock market, IMF indicator.

DOI: 10.7176/JESD/10-14-12

Publication date:July 31st 2020

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