Abstract
This study aimed to investigate the impact of financial liberalization on foreign reserves in Jordan over the period from 1998 to 2018. Several diagnostic tests were applied, including the Augmented Dickey-Fuller (ADF) and Phillips-Perron (PP) tests for stationarity. The results indicated that all-time series were non-stationary at their levels, whereas their first differences were stationary according to the Dickey-Fuller test (ADF). However, the Phillips-Perron test showed that some time series were stationary at their levels, while others were stationary at the first difference. The Cusum stability test was conducted to check the stability of the model parameters, and the autoregressive distributed lag (ARDL) bounds testing approach was applied for the cointegration test. The results showed that financial freedom (used as a proxy variable for financial liberalization) has a positive and statistically significant impact on foreign reserves. Therefore, this study recommends extending financial liberalization to increase foreign reserves in Jordan.
Recommended Citation
Al-Farkh, Aya and Malawi, Ahmad
(2022)
"The Impact of Financial Liberalization on Foreign Reserves in Jordan,"
Jordan Journal of Applied Science-Humanities Series: Vol. 33:
Iss.
1, Article 10.
Available at:
https://digitalcommons.aaru.edu.jo/jjoas-h/vol33/iss1/10