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JORDAN |
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Jordan is a middle-income country with a financial sector that, by regional standards, is well developed. Jordan has been implementing various financial sector reforms over the past four years to bring its financial sector in line with international standards. |
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Finance & banking system |
The Jordanian banking sector dominates the financial system, with 21 banks including eight foreign owned commercial banks (HSBC Bank ME, Standard Chartered Bank, Egyptian Arab Land Bank, City Group, Rafidain Bank, National Bank of Kuwait, Audi Bank and BLOM of Lebanon), two Islamic banks, and five investment banks specialised in lending to the agricultural, housing, rural, urban, and industrial sectors. There is no state ownership in the sector. The leading bank is the Arab Bank, which holds approximately 60 percent of overall banking assets. The Jordan Loan Guarantee Corporation guarantees bank loans granted to small-and-medium enterprises. The entire sector is supervised by the Central Bank of Jordan. In recent years, the Central Bank has strengthened banking supervision, now considered to be of a relatively high standard. It has been active in addressing issues related to non-performing loans and selected cases of undercapitalised banks.
The Jordanian Dinar is fully convertible for all commercial transactions and capital transfers.
Supervision has been strengthened and regulations clarified and updated through banking reform. A new banking law was passed in 2000 to improve the effectiveness of the sector. This new law protects depositors’ interests, diminishes money market risk, guards against concentration of lending, and governs new banking practices (e-commerce and e-banking) and money laundering.
Jordanian capital markets are regulated by the Jordan Securities Commission, created in 1997. The main stock exchange is the Amman Stock Exchange, which lists over 201 companies for market capitalisation of US$ 37.6 billion. Growth in foreign participation is attributable mainly to Saudi Arabia, Kuwait, Lebanon and Qatar, reaching US$ 15.9 billion in 2005 (42.3 percent of market capitalisation) compared to just US$ 179 million in 2004 (1 percent of market capitalisation). However, the sector is small and there are a limited number of financial products on the market. Recent developments include the requirement that all listed companies apply international accounting standards.
In 2004, the Jordanian insurance sector counted 26 companies, 1 life insurer, 7 general insurers, and 18 composite firms. The life insurance market - which is a small part of the overall sector (only 14 percent) - is dominated by the American Life Insurance Company (ALICO), which holds approximately 59 percent of all policies. The Insurance Regulatory Commission, an independent agency under the supervision of the Ministry of Trade and Industry, was created in 1999 to regulate the sector. |
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