The Variables Influence in Velocity of Money in Jordan during the Period (1990-2012)

This study aims at shedding the light on the variables that might have influenced velocity of money in Jordan during the period ( 1990-2012). Using the descriptive and quantitave analyses such as estimated multiregression through ordinary least square ( OLS) to examin the impact of the variables (( average personal income , consumer price index , interest rate , stocks price index , number of banks branches) on the velocity of money in its tight and broader definitions . The result of the study showed that the change in the consumer price index was the most influential on the velocity of money in its tight and broader definitions where this influence confirmed with the hypotheses of the study and significant at a high level of confidence where as the prices level in Jordan is the link circle between the economic and monetary variables because of the strong liaison with Banking interest rate. The study findings revealed that there is an obvious influence of the stock price index on the velocity of money in its tight and broader definitions. Whereas the influence was negative and confirmed with the hypotheses of the study and significant at a level 1% of confidence . it indicates that the size and the value of finance transaction in Jordan have an obvious influence on the velocity money . The results of the study inclicated that the influence of interest rate on the velocity of money in its tight and broader definitions was insignificant to any level of acceptable confidence. The results of the study also showed that the velocity of money in its tight definition ( V1) was increasing at the expense of velocity of money in its broader definition (V2) which indicated an increase in the money supply in its broader definition ( M2) at the expense of money supply in its tight definition M1 , so we can deduce that there is transformation in the Jordanian society to the saving accounts because of the inducements given by the banks to attract the depositors to these accounts which maximize their utilities and facilitize their dropping by automated services cards at any times they want. So it's considered by the monetary authority to control the changes in money supply in its broader definition (M2) resulted from the recent development in ( M2) .