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Palestine Technical University Research Journal

Abstract

This study aimed to investigate the effect of financial deepening on the economic growth for the case of Jordan during the period of 1980-2016. To this end, the study used multiple econometric model based on Autoregressive Distribution Lag approach(ARDL)and co-integration analysisamong the variablesbased on annual data.Philips-Perron(PP)testhave been utilized for stationary test.The study results show that there ispositive and significant effects between the financial deepening and economicgrowthwhen the amount of broad money supply/gross demostic productis used as proxy offinancial deepening,and there arenegative and significantly effects between financial deepening indicators were captured by interest rate spread, credit to the private sector, and negative insignificantly effects between commercial–central bank assestsand economic growthBased on the obtained results thestudy recommended to developtherole of financial sectors to increase the degree of financial deepening in the Jordanian economy, and directing the bank credit to the highly productive sectors, and reconsideringthe interest rates on depositsand loanstoincrease the financial deepening degree in the Jordanian economy.

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