Dynamic interactions among the industrial sector and its determinants in Jordan
The industrial sector is one of the most vital sectors in the national economy, so different local and global factors affect its performance. The study examines the impact of the global and local macroeconomic variables on the industrial index of the Amman Stock Exchange. This study covered the peri...
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doaj-66c4700407864cb68aa0b5c4c20b90c12020-11-25T03:17:33ZengLLC "CPC "Business Perspectives"Investment Management & Financial Innovations 1810-49671812-93582019-12-0116432534110.21511/imfi.16(4).2019.2812913Dynamic interactions among the industrial sector and its determinants in JordanNawaf Abuoliem0Safwan Mohd Nor1https://orcid.org/0000-0003-0791-2363Muhamad Safiih Lola2https://orcid.org/0000-0001-9287-7317Ali Matar3https://orcid.org/0000-0003-0599-5855Ph.D. Candidate, Faculty of Business, Economics and Social Development, University of Malaysia TerengganuPh.D., MMIM, RFP, RHB Islamic Endowed Scholar in Finance, Associate Professor, Faculty of Business, Economics and Social Development, University of Malaysia Terengganu, Malaysia; Research Associate, Victoria Institute of Strategic Economic Studies, Victoria UniversityPh.D., Associate Professor, Faculty of Ocean Engineering, Technology and Informatics, University of Malaysia TerengganuPh.D., Associate Professor, Finance and Banking Department, Jadara UniversityThe industrial sector is one of the most vital sectors in the national economy, so different local and global factors affect its performance. The study examines the impact of the global and local macroeconomic variables on the industrial index of the Amman Stock Exchange. This study covered the period from January 2007 to December 2016, which is considered as a crucial period in the Middle Eastern countries. This period encompasses the worldwide economic meltdown from 2007 to 2008, the Arab spring of 2010 and the wars in Syria and Iraq from 2012 to 2014. The macroeconomic variables used in this study as domestic variables from Jordan were the deposit interest rate (IN), inflation rate (INF), money supply 2 (MS2), trade balance (TR), producer price index (PPI) and the industrial production index (IPI). At the same time the global oil price (WTI) was used as a global factor to measure the external shocks. This study used the ARDL bound testing approach to examine the co-integration, short-run and long-run relationships. Moreover, Granger causality test was used to detect the causality relationship in the short and long run between the selected macroeconomic indicators and the industrial index. It was found out that the inflation rate positively influenced the industrial index, which provides some evidence that the industrial sector in Jordan acts as a hedge against inflation. In addition, the global oil price showed a significant negative impact on the industrial sector. Some important implications for investors, government bodies, and policymakers are discussed.https://businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/12913/IMFI_2019_04_Abuoliem.pdfARDcrude oil priceinflationmacroeconomic indicatorsstock price |
collection |
DOAJ |
language |
English |
format |
Article |
sources |
DOAJ |
author |
Nawaf Abuoliem Safwan Mohd Nor Muhamad Safiih Lola Ali Matar |
spellingShingle |
Nawaf Abuoliem Safwan Mohd Nor Muhamad Safiih Lola Ali Matar Dynamic interactions among the industrial sector and its determinants in Jordan Investment Management & Financial Innovations ARD crude oil price inflation macroeconomic indicators stock price |
author_facet |
Nawaf Abuoliem Safwan Mohd Nor Muhamad Safiih Lola Ali Matar |
author_sort |
Nawaf Abuoliem |
title |
Dynamic interactions among the industrial sector and its determinants in Jordan |
title_short |
Dynamic interactions among the industrial sector and its determinants in Jordan |
title_full |
Dynamic interactions among the industrial sector and its determinants in Jordan |
title_fullStr |
Dynamic interactions among the industrial sector and its determinants in Jordan |
title_full_unstemmed |
Dynamic interactions among the industrial sector and its determinants in Jordan |
title_sort |
dynamic interactions among the industrial sector and its determinants in jordan |
publisher |
LLC "CPC "Business Perspectives" |
series |
Investment Management & Financial Innovations |
issn |
1810-4967 1812-9358 |
publishDate |
2019-12-01 |
description |
The industrial sector is one of the most vital sectors in the national economy, so different local and global factors affect its performance. The study examines the impact of the global and local macroeconomic variables on the industrial index of the Amman Stock Exchange. This study covered the period from January 2007 to December 2016, which is considered as a crucial period in the Middle Eastern countries. This period encompasses the worldwide economic meltdown from 2007 to 2008, the Arab spring of 2010 and the wars in Syria and Iraq from 2012 to 2014. The macroeconomic variables used in this study as domestic variables from Jordan were the deposit interest rate (IN), inflation rate (INF), money supply 2 (MS2), trade balance (TR), producer price index (PPI) and the industrial production index (IPI). At the same time the global oil price (WTI) was used as a global factor to measure the external shocks. This study used the ARDL bound testing approach to examine the co-integration, short-run and long-run relationships. Moreover, Granger causality test was used to detect the causality relationship in the short and long run between the selected macroeconomic indicators and the industrial index. It was found out that the inflation rate positively influenced the industrial index, which provides some evidence that the industrial sector in Jordan acts as a hedge against inflation. In addition, the global oil price showed a significant negative impact on the industrial sector. Some important implications for investors, government bodies, and policymakers are discussed. |
topic |
ARD crude oil price inflation macroeconomic indicators stock price |
url |
https://businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/12913/IMFI_2019_04_Abuoliem.pdf |
work_keys_str_mv |
AT nawafabuoliem dynamicinteractionsamongtheindustrialsectoranditsdeterminantsinjordan AT safwanmohdnor dynamicinteractionsamongtheindustrialsectoranditsdeterminantsinjordan AT muhamadsafiihlola dynamicinteractionsamongtheindustrialsectoranditsdeterminantsinjordan AT alimatar dynamicinteractionsamongtheindustrialsectoranditsdeterminantsinjordan |
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