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Abstract
Jordan’s financial system has expanded considerably over the last two decades, as evidenced by the increase in the ratio of money and quasi money to GDP from 60 percent in 1970 to over 100 percent in the late 1980s. Like the rest of the economy, the financial system in Jordan was adversely affected by the financial crisis of the late 1980s. Thereafter, it strengthened significantly as a result of the implementation of structural reforms, a general rebounding of economic activities after 1992, and the associated increased profitability of the commercial banks. Although the financial system is deeper than before, it is still dominated by a small number of domestic banks; the variety of financial instruments for users and providers of funds is rather limited; the capital market—with the exception of the stock market—is extremely thin. In general, like in many other developing countries, the financial system faces the challenge of funding the most efficient investments while managing risks and integrating with world financial markets.
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