The Role of the Global Financial Crisis on Foreign Investment in Jordan

Rula M. Airout


The financial crisis has resulted a sudden decline in the prices of one or more assets such as capital assets used in the production process (such as machinery and buildings), financial assets (such as equity of physical capital or commodity inventory, such as shares and savings accounts) The crisis took the form of a sudden collapse in the stock market, in the currency of a country, or in the real estate market, or in a group of financial institutions, and then spread to the rest of the economic sectors (Abdullah , Ali, 2008).

Since 2000 real estate values have soared, so real estate companies listed on the stock exchange have been rising continuously around the world, especially in the United States, until the purchase of the property become the best type of investment, while other activities, including modern technology, are subject to loss. The Americans individuals and companies started to buy property for housing, long-term investment or speculation. Real estate facilities have expanded to such an extent that banks have extended loans even to individuals unable to pay their debts because of their poor incomes (Sabah, Naoush, 2008).

The real estate bubble swelled to its peak and exploded in the summer of 2007 as real estate depreciated and individuals were no longer able to repay their debts even after the sale of their encumbered properties. More than 2 million Americans have lost their real estate ownership and are bound by financial obligations throughout their lives. Due to the damage of creditor banks as a result of non-payment by borrowers of their loans, the value of their shares fell on the stock market and many real estate companies declared bankruptcy.

The global financial crisis has spread to the rest of the world. In this context, the role of the global financial crisis on foreign investment in Jordan will be explored

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