The 2008 Global Financial Crisis: The Case of a Market with Consistent Losses Ever Since

Hadeel Yaseen (), Ghassan Omet () and Morad Abdel-Halim ()
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Hadeel Yaseen: Private Applied Science University, Jordan
Ghassan Omet: The University of Jordan, Jordan
Morad Abdel-Halim: Ministry of Finance, Jordan

Eurasian Journal of Business and Management, 2015, vol. 3, issue 1, 8-19

Abstract: Following the 2008 global financial crisis, and in common with many stock markets around the world, the Amman Securities Exchange (ASE) experienced some heavy losses. However, what makes the Jordanian market probably different is its inability to recover. The weighted price index fell from 7519.3 points in 2007 to 5520.1 points in 2009, to 4593.9 points in 2012, and to 4336.7 points by the end of 2013 respectively. With a statutory minimum tick which is equal to one pence, this observation has some serious implications to the liquidity cost that prevails in the Jordanian capital market, and the cost of financing listed firms. The primary aim of this research paper is to examine the impact of the stock market crash in Jordan on liquidity cost. Based on a total number of 108 listed stocks and daily data during the years 2007 and 2009, the empirical results indicate that liquidity cost on the Jordanian capital market is high. In addition, the results show that the 2009 stock market crash has led to a substantial increase in liquidity cost. In other words, the market must consider a number of remedial measures to improve its’ operational efficiency.

Keywords: Amman Securities Exchange; Bid-ask Spread; Minimum Tick Specialist (search for similar items in EconPapers)
Date: 2015
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