Macroeconomic Drivers of Stock Market Development: Evidence From Jordan

Abstract

This paper investigates the macroeconomic drivers of the stock market development in Jordan during the period 1978-2016. The macroeconomic variables are represented by remittance inflows, investment, banking sector development, and level of income. The paper employs the ARDL bounds testing procedure to estimate the potential short run and long run relationships between the stock market development indicator and macroeconomic variables. The empirical results show that the macroeconomic variables positively and significantly affect the development of stock market in Jordan, except remittances which has a negative effect on the stock market development indicator. All signs and magnitudes are consistent with the literature.