International Journal of Business and Economics Research
Volume 9, Issue 5, October 2020, Pages: 326-333
Received: Aug. 3, 2020;
Accepted: Aug. 17, 2020;
Published: Aug. 27, 2020
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Tamara Firas Al Maaytah, Department of Business Economics, School of Graduate Studies, University of Jordan, Amman, Jordan
Talib Mohammad Awad, Department of Business Economics, School of Business, University of Jordan, Amman, Jordan
This study aimed to estimate the long-run impact of financial inclusion along with a set of control variables on the poverty in Jordan during the period spans from 1980 through 2018. The per capita income growth rate was used as an indicator of poverty due to the lack of annual data on poverty indices. The study used the Autoregressive Distributed Lag (ARDL) Model to test for cointegration. Also, both Fully Modified OLS (FMOLS) and Dynamic OLS (DOLS) are used to estimate the long-run model parameters. The ADF (Augmented Dickey-Fuller) results indicate that the variables integrated of order one I(1) or integrated of order zero I(0) but none is I(2). The diagnostic statistical tests necessary to ensure the model’s adequacy and validity indicate that the model is free from statistical problems, and the estimation results are reliable. The bounds test to cointegration provide evidence on the existence of long-run equilibrium relationship among variables, and hence, the variables are cointegrated. The empirical results revealed a positive effect of loans and demand deposits on per capita income, which reflects a reduction in poverty. While the number of bank branches has a negative impact on the per capita income, and hence, increasing poverty. Accordingly, the study recommended improving financial and banking systems to facilitate obtaining loans, increase the number of branches to improve individuals' access to financial services, and raising the interest rate on deposits to encourage investors and capital owners and companies to save in banks.
Tamara Firas Al Maaytah,
Talib Mohammad Awad,
The Impact of Financial Inclusion on Poverty in Jordan, International Journal of Business and Economics Research.
Vol. 9, No. 5,
2020, pp. 326-333.
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