The Causal Relationship between Returned Cheques and Economic Prosperity in Jordan

Abstract

The study aimed to determine the relationship between returned cheques, GDP, bank credit and public spending in Jordan during 2000-2021. The research developed the econometric model using the ARDL for co-integration. The study found several outcomes: returned cheques have a strong positive impact on GDP in the short term, the public spending has short-term positive effect on returned cheques, and bank credit negatively affects returned cheques in Jordan. The granger causality test proves causal relationships from bank credit to public spending and from the returned cheques to the GDP in Jordan. Finally, it found that returned cheques affected economic growth in the long term. The long-term effect of public spending, bank credit, and GDP on returned cheques not proved. The study presents that returned cheques as a financial phenomenon and must purely resolved under economic perspective rather than the legislative and legal view.