This study investigates empirically into the acclaimed positive role played financial market leading growth, with evidence from the Jordan financial market. Utilising, several econometric techniques models, such as unit root test, co-integration test and formal tests of causality developed by C.J. Granger and yearly Jordan data for the period 1980-2012. Results show that both Engle-Granger and Johansen co-integration test support the view that there is a short-run and long-run relationship between financial market development and economic growth in Jordan. On the other hand, there was no evidence to support the view that financial market in Jordan is a leading sector in the process of the country’s economic development. In particular, the causality relationship between financial market development and economic growth in Jordan is bi-directional. Higher development in the financial market causes higher real economic growth. High economic growth in turn promotes development in the financial market. This study’s results will be useful in reaching policy decisions to develop financial markets to increase economic growth in developing countries or/ emerging economies, in general, and within Jordan, in particular. Furthermore, providing empirical evidence regarding this critical issue within specific emerging economies will add to the literature on financial market related to the role of financial market development and its influence on economic growth and, thus, initiate an exciting topic for research.
| Published in | Journal of Investment and Management (Volume 2, Issue 5) |
| DOI | 10.11648/j.jim.20130205.11 |
| Page(s) | 87-103 |
| Creative Commons |
This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited. |
| Copyright |
Copyright © The Author(s), 2013. Published by Science Publishing Group |
Financial Market, Economic Growth, Error Correction, Co-integration, Granger Causality Models, Jordan
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APA Style
Najeb Masoud, Glenn Hardaker. (2013). Do Financial Market Lead to Economic Growth? A Causality Test in Jordan. Journal of Investment and Management, 2(5), 87-103. https://doi.org/10.11648/j.jim.20130205.11
ACS Style
Najeb Masoud; Glenn Hardaker. Do Financial Market Lead to Economic Growth? A Causality Test in Jordan. J. Invest. Manag. 2013, 2(5), 87-103. doi: 10.11648/j.jim.20130205.11
AMA Style
Najeb Masoud, Glenn Hardaker. Do Financial Market Lead to Economic Growth? A Causality Test in Jordan. J Invest Manag. 2013;2(5):87-103. doi: 10.11648/j.jim.20130205.11
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Download@article{10.11648/j.jim.20130205.11,
author = {Najeb Masoud and Glenn Hardaker},
title = {Do Financial Market Lead to Economic Growth? A Causality Test in Jordan},
journal = {Journal of Investment and Management},
volume = {2},
number = {5},
pages = {87-103},
doi = {10.11648/j.jim.20130205.11},
url = {https://doi.org/10.11648/j.jim.20130205.11},
eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jim.20130205.11},
abstract = {This study investigates empirically into the acclaimed positive role played financial market leading growth, with evidence from the Jordan financial market. Utilising, several econometric techniques models, such as unit root test, co-integration test and formal tests of causality developed by C.J. Granger and yearly Jordan data for the period 1980-2012. Results show that both Engle-Granger and Johansen co-integration test support the view that there is a short-run and long-run relationship between financial market development and economic growth in Jordan. On the other hand, there was no evidence to support the view that financial market in Jordan is a leading sector in the process of the country’s economic development. In particular, the causality relationship between financial market development and economic growth in Jordan is bi-directional. Higher development in the financial market causes higher real economic growth. High economic growth in turn promotes development in the financial market. This study’s results will be useful in reaching policy decisions to develop financial markets to increase economic growth in developing countries or/ emerging economies, in general, and within Jordan, in particular. Furthermore, providing empirical evidence regarding this critical issue within specific emerging economies will add to the literature on financial market related to the role of financial market development and its influence on economic growth and, thus, initiate an exciting topic for research.},
year = {2013}
}
TY - JOUR T1 - Do Financial Market Lead to Economic Growth? A Causality Test in Jordan AU - Najeb Masoud AU - Glenn Hardaker Y1 - 2013/10/20 PY - 2013 N1 - https://doi.org/10.11648/j.jim.20130205.11 DO - 10.11648/j.jim.20130205.11 T2 - Journal of Investment and Management JF - Journal of Investment and Management JO - Journal of Investment and Management SP - 87 EP - 103 PB - Science Publishing Group SN - 2328-7721 UR - https://doi.org/10.11648/j.jim.20130205.11 AB - This study investigates empirically into the acclaimed positive role played financial market leading growth, with evidence from the Jordan financial market. Utilising, several econometric techniques models, such as unit root test, co-integration test and formal tests of causality developed by C.J. Granger and yearly Jordan data for the period 1980-2012. Results show that both Engle-Granger and Johansen co-integration test support the view that there is a short-run and long-run relationship between financial market development and economic growth in Jordan. On the other hand, there was no evidence to support the view that financial market in Jordan is a leading sector in the process of the country’s economic development. In particular, the causality relationship between financial market development and economic growth in Jordan is bi-directional. Higher development in the financial market causes higher real economic growth. High economic growth in turn promotes development in the financial market. This study’s results will be useful in reaching policy decisions to develop financial markets to increase economic growth in developing countries or/ emerging economies, in general, and within Jordan, in particular. Furthermore, providing empirical evidence regarding this critical issue within specific emerging economies will add to the literature on financial market related to the role of financial market development and its influence on economic growth and, thus, initiate an exciting topic for research. VL - 2 IS - 5 ER -
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