2014-05-01

With the rapid development of financial instruments intermediaries, provision the means of payment, representing major role in economic activity, the relationship between the development of financing means (financial sector), and economic growth became the focus of many economic studies in recent decades, both in the theoretical or applied side. Researches mainly have been focused on the long-term direction of the relationship between financial development and economic growth. Some studies believe that the development of the financial means can accelerate the rate of capital accumulation, and thus enhance the opportunities for economic growth. On the other hand, some economists believe that economic growth leading to the development of the financial terms in financial sophistication is a positive function in the real wealth, while the process of economic development leads to the growth in average per capita income, and to faster growth in financial assets. This means that the direction of causality comes from economic growth to financial sophistication. Moreover, there is a debate about the relationship between the interdependence of evolution in the means of finance and economic growth axis in many applied studies, which provide disputable results. While the importance of financial sector in Jordan stimulates the growth and economic stability and the role expected of it in the future, this study will analyze the existence of long-term relationships between the variables by testing the stability of the data, and its co-integration. In addition, it will determine the direction of long-term relationship between financial sophistication and economic growth through using multiple linear regression model.