European Journal of Business and Management www.iiste.org ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online) Vol.5, No.16, 2013 51 The Relationship between Amman Stock Exchange (ASE) Market and Real Gross Domestic Product (GDP) Dr. Abdel-Aziz Ahmad Sharabati Abstract Purpose: The purpose of the study is to investigate the relationship between Amman Stock Exchange (ASE) market development and Real Gross Domestic Product (GDP). Design/Methodology/Approach: The study investigated the relationship between independent variables: ASE market sectors on dependent variable i.e. Real GDP. The study used 14 years data from 1999 to 2012. Statistical techniques such as descriptive statistics, t-test, ANOVA test, correlation, simple and multiple regressions, stepwise regression, were employed. Findings/Results/Conclusions: Pearson correlation results showed that the four sectors of ASE market are strongly related to each other and are strongly related to ASE general indicator. Among the four ASE sector only industrial sector showed a strong relationship with GDP, while others did not show a significant relationship with GDP including ASE general indicator. Simple regression test showed that there is no effect of ASE general indicator on GDP. While multiple regressions showed that there is a strong effect of the ASE sectors together on GDP, but results did not show any significant effect of each sector when considering the four sectors together on GDP. Furthermore, first stepwise regressions model showed that there is a strong positive significant effect of industries sector on GDP, while second model showed that there is a strong positive significant effect of industries sector on GDP and there is a negative significant effect of insurances sector on GDP. Finally, simple regression showed that when each ASE sector regressed separately against GDP, only industries sector showed a high a significant effect on GDP. Research Limitations/Recommendations: Limitations to data access refer to the fact that gathering data from ASE market and government institutions reports is restricted to the period of these data, which may limit the quality and quantity of the collected data. Second, the collected data is treated as a package, not as yearly, nor considering crises, which may have different results. Therefore, further empirical studies considering periods and crises are needed. Third, the research findings are based on data collected from ASE market and government institutions only. Collecting data at an organization level and an industry level would provide further robust results. Fourth, the results are limited to Jordan. Generalizing results of a Jordanian setting to other countries may be questionable. Therefore, the results may be carefully interpreted. Further empirical researches involving data collection over diverse countries are needed. Contributions/Practical Implications: The research makes significant theoretical and empirical contributions to literature regarding influence of stock markets on GDP. The research results might help both academics and practitioners to be more ready to understand the components of stock market and their effect on GDP. The conceptual model of this study represents an integrated view on ASE. It might be not advisable to use parts of the model independently due to the interrelatedness of the components of the model. There is a need to analyze data at an organization level in order to clearly prove the assumptions of the ASE method. Social Contribution: The current study results may help investors to select their investment sector and may provide stock holders with information about the relationship between stock market and GDP. Expected Value: The empirical results of this study built on the previous researches on the relationship between stock market and GDP. The results can provide the reference for further researches about the relationship between stock markets and GDP. Key Words: Amman Stock Exchange (ASE), Banks Sector, Insurances Sector, Services Sector, Industries Sector, Real Gross Domestic Product (GDP). Introduction: Since decades, the debate about the relationship between stock market development and macroeconomic factors are going on, specially about the relationship between stock market development and economic growth. Many studies measure economic development by GDP, while other studies use many indicators such as consumer price index, exchange rate, inflation rate, money supply, foreign direct investment, population growth, industrial production index, etc. Kumar et al. (2013) stated: For the past few decades, a popular index of welfare has been measures of economic activity in a country or region, like GDP. While GDP is a reasonable measure of economic activity, when measuring welfare in a dynamic setting, some economists prefer using wealth or net national product (NNP) as a measure of economic wellbeing or social welfare. The current study uses the GDP as an indicator for macro-economical development. Therefore it investigated the relationship between stock market development and GDP as an indicator for economic growth in