The Impact of Foreign Indirect Investment in ASE on Foreign Reserves in Jordan: an Econometric Study during the Period (1995-2021)

This study aims to investigate the impact of foreign indirect investment in Amman Stock Exchange on foreign reserves in Jordan for the period from 1995 to 2021. The importance of the study stems from the fact that it focuses on foreign reserves, which represent the protective shield of the economy as one of the most important factors in the strength and stability of the economy as well as indicates the creditworthiness of countries and the extent of their ability to carry out international financial obligations. The study reveals the true role played by indirect foreign investments in foreign reserves in Jordan, as it is a vital channel for financing if used properly. To achieve the study's aim, the researcher used descriptive and econometric methods. The diagnostic tests applied were unit root tests for stationary, stability test and co–integration test. The Autoregressive Distribution Lag (ARDL) is employed for the Regression. The results showed that in the short-run, there was a positive impact of foreign indirect investment on foreign reserves, along with tourism revenue, external debt service and foreign direct investment, but in the long-run, foreign indirect investment had a negative impact on foreign reserves in Jordan. While workers' remittances and foreign direct investment had a positive impact. According to tourism revenue, the results indicated that there is no statistically significant relationship with foreign reserves in the long run. To reach a deeper understanding of the composition of foreign reserves in Jordan, other determinants of foreign reserves should be studied, such as the exchange rate, interest rates, imports determinants, in order to help decision makers, maintain a safe level of reserves.