Abstract
This study aimed to investigate the impact of the rule of law on the stock price index in the Amman Stock Exchange over the period from 1998 to 2017. Several diagnostic tests were applied, such as the Augmented Dickey-Fuller (ADF) test for stationarity. The results indicated that the time series of the real interest rate is stationary at its levels (i.e., I(0)), whereas the stock price index, indirect foreign investment, and rule of law are stationary at their first differences (i.e., I(1)). The real GDP was found to be stationary at the second difference (i.e., I(2)). A Vector Autoregression (VAR) model was used for estimation. The study utilized two major analytical tools: Variance Decomposition and Impulse Response Function. The findings revealed a positive impact of the rule of law on the stock price index in the Amman Stock Exchange. Based on these findings, the study recommended implementing laws and regulations to improve the stock price index in the Amman Stock Exchange in Jordan.
Recommended Citation
Al-Azzam, Majeda and Malawi, Ahmad
(2022)
"The Impact of the Rule of Law on the Stock Price Index in the Amman Stock Exchange (Jordan): An Econometric Study (1998-2017),"
Jordan Journal of Applied Science-Humanities Series: Vol. 32:
Iss.
2, Article 9.
Available at:
https://digitalcommons.aaru.edu.jo/jjoas-h/vol32/iss2/9
