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The Impact of Banking Concentration on Investment and Economic Growth in Jordan

Author

Listed:
  • Khalid Najeh Al-Tanbour

    (Department of Business Economics, School of Business, University of Jordan, Amman, Jordan.)

  • Talib Mohammad Awad-Warrad

    (Department of Business Economics, School of Business, University of Jordan, Amman, Jordan.)

Abstract

This paper aims to investigate the impact of banking concentration on investment and economic growth for the Jordanian economy. It utilizes annual sample for the period between 1980 and 2018. The study examines the effectiveness of the Structure-Conduct-Performance (SCP) hypothesis and the other Efficient-Structure (ES) hypothesis for the case of Jordan. The Augmented Dickey-Fuller (ADF) and cointegration tests are used and the results indicate to the appropriateness of the following econometric techniques: Autoregressive Distributed Lag Bound test (ARDL), the fully modified OLS (FMOLS) and generalized methods of moments (GMM). The estimation results indicated to negative relationship between concentration index and both investment spending and the rate of real economic growth. The study recommended that the Central Bank of Jordan should continue to allow new banks to enter the banking market to reduce the impact of concentration as much as possible to achieve competitive gains in the Jordanian banking sector.

Suggested Citation

  • Khalid Najeh Al-Tanbour & Talib Mohammad Awad-Warrad, 2021. "The Impact of Banking Concentration on Investment and Economic Growth in Jordan," International Journal of Economics and Financial Issues, Econjournals, vol. 11(1), pages 71-78.
    • Handle: RePEc:eco:journ1:2021-01-7
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    References listed on IDEAS

    as
    1. Michael Adusei, 2013. "Financial Development and Economic Growth: Evidence from Ghana," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 7(5), pages 61-76.
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    More about this item

    Keywords

    Banking Concentration; FMOLS; GMM; Investment; Economic Growth.;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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