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The Impact of Interest Rate on the Economy from the Viewpoint of Banking Managers: Empirical Evidence from Jordan
10-Sep-2017
The Impact of Interest Rate on the Economy from the Viewpoint of Banking Managers: Empirical Evidence from Jordan
By Dr. Reem Shaher Al Araj - IASCA BOD Member
The research aims at investigating the role and impact of interest rate on Jordanian economy from the viewpoint of banking managers in Jordan. The methodology is descriptive and analytical using mean, standard deviation, t-test and percentages as statistical tools. The study concludes that the impact of interest rate on Jordanian monetary policy is restricted by two factors: pegging Jordanian dinar to the American dollar which limits the effective role of interest rate on Jordanian monetary policy and the dual banking system of traditional and Islamic banks where Islamic banks do not deal with interest rate.
Moreover, the study concluded that what determinates interest rate in Jordan are money supply, demand for money, inflation and economic conditions. In order to have an effective role for interest rate on monetary policy, the researcher recommends pegging the Jordanian dinar to a basket of currencies.
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