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The Impact of Political Stability on the Effectiveness of the Early Warning Systems in Predicting the Financial Crises: The Case of Jordan and Qatar

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  • Baker Shnekat
  • Ghazi Al-Assaf

Abstract

The research aims to identify the impact of political stability in determining the effectiveness of early warning systems in predicting financial crises. The research applied a standard descriptive approach. In general, when comparing the two countries before including the model for economic variables the results showed that the nature of the impact of economic variables is different as the index of the financial crisis in Jordan is affected by the import of goods and services while the most influential indicators in the early warning model for the occurrence of the financial crisis in Qatar is the index of exporting goods and services on the basis that the system Qatari financial is very sensitive to the subject of export of gas and oil. Also, the results showed that there is a very significant impact of political stability on the financial crisis, which is greater than the impact of economic indicators, and if the two countries differed in which indicators for political stability have the greatest impact on the occurrence of the financial crisis, in Jordan the most influential indicator was the government effectiveness variable in Qatar, the regulatory quality index was the most influential.

Suggested Citation

  • Baker Shnekat & Ghazi Al-Assaf, 2020. "The Impact of Political Stability on the Effectiveness of the Early Warning Systems in Predicting the Financial Crises: The Case of Jordan and Qatar," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(4), pages 398-407, July.
    • Handle: RePEc:jfr:ijfr11:v:11:y:2020:i:4:p:398-407
    DOI: 10.5430/ijfr.v11n4p398
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    References listed on IDEAS

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    1. Beckmann, Daniela & Menkhoff, Lukas & Sawischlewski, Katja, 2006. "Robust lessons about practical early warning systems," Journal of Policy Modeling, Elsevier, vol. 28(2), pages 163-193, February.
    2. Tjeerd M. Boonman & Jan P. A. M. Jacobs & Gerard H. Kuper & Alberto Romero, 2019. "Early Warning Systems for Currency Crises with Real-Time Data," Open Economies Review, Springer, vol. 30(4), pages 813-835, September.
    3. Tjeerd M. Boonman & Jan P. A. M. Jacobs & Gerard H. Kuper, 2017. "An Early Warning System for currency crises in Argentina and Brazil 1990-2009," EconoQuantum, Revista de Economia y Finanzas, Universidad de Guadalajara, Centro Universitario de Ciencias Economico Administrativas, Departamento de Metodos Cuantitativos y Maestria en Economia., vol. 14(2), pages 47-68, Julio-Dic.
    4. Jan Babecký & Tomáš Havránek & Jakub Matìjù & Marek Rusnák & Kateøina Šmídková & Boøek Vašíèek, 2011. "Early Warning Indicators of Crisis Incidence: Evidence from a Panel of 40 Developed Countries," Working Papers IES 2011/36, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Nov 2011.
    5. Kaufmann, Daniel & Kraay, Aart & Mastruzzi, Massimo, 2010. "The worldwide governance indicators : methodology and analytical issues," Policy Research Working Paper Series 5430, The World Bank.
    6. Romero Alberto & Kuper Gerard H. & Jan P.A.M. Jacobs & Boonman Tjeerd, 2017. "Early Warning Systems with Real-Time Data," Working Papers 2017-16, Banco de México.
    7. Ghazi Al-Assaf, 2017. "An Early Warning System for Currency Crisis: A Comparative Study for the Case of Jordan and Egypt," International Journal of Economics and Financial Issues, Econjournals, vol. 7(3), pages 43-50.
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