Resumen de The Relationship between Real and Banking Sectors in Jordan

Mohammad Alawin, Tariq Al Muhaissen, Ebrahim Merza

• This paper investigates the interrelation between real side and banking side in Jordan, using real GDP as an indicator for the real side, changing in private debt and capital adequacy index as indicators for the banking side for the period 1980-2011. The results indicate that there is a positive relationship between the two sides in the short run. Impulse Response Function (IRF) verified that changing in the private debt affects RGDPsignificantly, suggesting that the banking side affects the real side. Also, the IRF verified that capital adequacy index affects RGDP, suggesting that the strength of banking system also affects the real side too.