Relationship between Macroeconomic Variables and their Impact on Non-Performing Loans in Jordanian Banks

Amjad Qwader ()

Asian Economic and Financial Review, 2019, vol. 9, issue 2, 166-175

Abstract: This study aims at showing the impact of macroeconomic variables such as GDP, unemployment rate, interest rates, remittances of workers abroad and external grants on non-performing loans in Jordanian banks. To achieve the objectives of the study and to test its hypothesis, the Autoregressive Distributed-lagged model (ARDL) was used. The study found that there is a long-term equilibrium relationship between these variables of the study. It also found that there is an inverse relationship with a significant effect on the long and short term for both external grants, GDP (Gross Domestic Product) and interest rates on non-performing loans in Jordanian banks. On the other hand, the study concluded that there is no impact on the long and short run for both remittances of workers abroad and the rate of unemployment on non-performing loans in Jordanian banks because these variables are not significant. The study recommends the Jordanian government to adopt policies and programs aiming at the reduction of the cost of borrowing to cut down NPAs, to promote the development of local investments and explore new international markets to attract Jordanian labor.

Keywords: External grants; GDP; Interest rates; Non-performing loans; Unemployment. (search for similar items in EconPapers)
Date: 2019
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://archive.aessweb.com/index.php/5002/article/view/1794/2705 (application/pdf)
https://archive.aessweb.com/index.php/5002/article/view/1794/3958 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:asi:aeafrj:v:9:y:2019:i:2:p:166-175:id:1794

Access Statistics for this article

More articles in Asian Economic and Financial Review from Asian Economic and Social Society
Bibliographic data for series maintained by Robert Allen ().