Jamileh Ali Mustafa

This study investigates the implications of the interaction of financial literacy, regulatory technology, and decentralized finance applications for financial sector development. A two-step analytical regression approach on EViews 10 was used, which performs a one-factor analysis for each variable to identify the individual impact of each factor. A linear FMOLS approach was used to evaluate the cooperative effect of integration. The methodology was implemented on a dataset comprising 2,880 observations from 23 financial institutions in Jordan.
The findings support the hypothesized dynamic interrelations between the essential Fintech factors relevant to the sustainable development of the financial sector, including significant and insignificant factors with the impact of inflation, which provides an adequate understanding of Fintech’s evolution. Additionally, the outcomes consider post-2017 regulatory changes that reflect the role of supervision and regulation for the financial sector’s flexibility and efficiency. Therefore, the results reveal the essential contribution of integrating decentralized finance applications, financial literacy, and regulatory technology to the development of Jordan’s financial sector. Financial literacy serves as a facilitator, regulatory technology is a compliance enabler, and decentralized finance applications are driving forces of innovation and financial inclusion, ensuring a robust and sustainable financial ecosystem. It is shown that the interaction of factors forces the sector’s development, reflecting the world’s trend in digital inclusion and viable financial development.

This study investigated the influence of digital payment systems on banks’ stability by exploring their effect on the Z-score of the Jordanian banking sector during the period from 2004 until 2022. It specifically focused on liquidity risks generated from e-payment transactions and how sufficient capital adequacy ratios enhance banking sector stability over both short-term and long-term periods by standing against sudden volatilities yielded from large amounts of transactions executed through digital payment systems. To achieve this objective, the study utilizes time series dual regression analyses of vector autoregression and vector error correction models on E-views 12 to cover the time variation influences of digital payment on the banking sector Z-score. The regression results indicate varied effects between the benefits and risks of digital payment systems on a bank’s Z-score that influence the immediate sector’s stability, indicating that while digital payment systems can initially hold liquidity risks, leading to short-term instability; the strategic implementation of robust capital adequacy ratio stands as a protective buffer by fostering long-term banking sector resilience. The results also suggest future predictions and insights for financial sector legislators and regulators emphasizing the need for monitoring strategies that stimulate continuous innovations in the digital payment infrastructure while constantly ensuring the stability and resilience of the banking sector. Thus, prudent liquidity management and the reinforcement of capital buffers are encouraged to pilot the dual challenges and opportunities that appeared at the stages of the digital payment process, ultimately guiding the sector toward continuous growth and sustainability.

Acknowledgment
The author is grateful to the Middle East University, Amman, Jordan for the financial support granted to cover the publication fee of this research.

Type of the article: Research Article

Abstract
This study examines the effect of disclosure of Key Audit Matters (KAM) on accounting and market performance of Jordanian banks listed on the Amman Stock Exchange over the period 2017–2024. The research is relevant because disclosure of audits is at the heart of winning the confidence of investors and corporate governance. The 13-bank panel data are used over the period of eight years, and fixed effects regression with robust clustered standard errors is employed. Two regressions are estimated: accounting performance in the form of return on assets (ROA) and market valuation in the form of Tobin’s Q. These results are suggestive of the fact that more disclosure of KAM has been negatively and significantly connected with ROA (β = –0.176, p < 0.05), implying short-term profitability constraints, but positively and significantly connected with Tobin’s Q (β = 0.285, p < 0.05), implying greater investor optimism and reduced information asymmetry. These results suggest that although KAM disclosures are not expected to directly improve profitability, they enhance market valuation through enhanced disclosure and governance. The results have policy implications for improving disclosure standards to enhance transparency and stability, and for banks to further work on strengthening the independence and qualifications of audit committees to drive performance improvements.

Acknowledgment
The authors would like to thank Middle East University, Amman, Jordan, for the full funding of this research.

Type of the article: Research Article

Abstract
This study examined per capita spending as a key indicator of domestic-level economic activity and households’ financial involvement, both of which are essential to promoting inclusive and sustainable economic growth. The analysis focused on the case of Jordan, covering the period 1993–2023, to investigate the effect of three key determinants of per capita expenditure: First, Fintech solutions as a main facilitator of financial inclusion; second, digital tools as the main indicator of digital infrastructure development level; and finally, macroeconomic indicators that mainly affect economic growth. Therefore, the Fully Modified Least Squares (FMOLS) method was applied to the data to emphasize the dynamic relationship between the three determinants in driving per capita expenditure.
The regression results showed a level of spending that naturally exists, even without other determinants, with a coefficient of 4.6 due to the government’s grants and subsidies. Furthermore, they affirmed that higher disposable income through wages, as well as effective financial access through remittance transfer payments and account ownership, enhances individual consumption and financial inclusion. Additionally, despite the large volume of cards, the insignificant impact on PCE suggested that Fintech solutions heavily vary with the progress of technological infrastructure, such as the internet and ICT, combined with the need for financial literacy to avoid misuse of them. Additionally, the negative impact of inflation and the insignificant effect of GDP suggest that without stable economic indicators, such as consistent GDP growth, controlled inflation, and income equality, digital financial solutions may struggle to deliver sustainable benefits in sustaining economic growth.