Stock Exchange Development and Economic Growth: Empirical Evidence from Jordan

The present study examined the relationship between Amman stock exchange development measured by MarketCapitalization Ratio (MCR) and Value Traded Ratio (VTR) and Jordan economic growth measured by GrossDomestic Product Growth (GDPG) for the period 1978–2012. The study used Vector Error Correction Model(VECM) to examine the hypotheses. The study indicated that there is a positive and significant relationshipbetween Amman stock exchange development and Jordan economic growth. In addition, the pairwise Grangercausality test shows that there is a unidirectional causality running from market capitalization ratio and valuetraded ratio to economic growth.