Reports show that the number of checks circulated in Jordan
has declined steadily over the period of 2018 – 2020, and started to rise
again, but at a very slow rate, in 2021 and 2022. Given that checks are the
preferred debt payment method in the country, it is worth investigating the
reason(s) behind this rise and decline, whether there is an emerging trend, and
if so, can this information be of use to analysts and policymakers.
اضافة اعلان
According to the Central Bank of Jordan (CBJ), the number of
checks has declined from 16.18 million (numbers are rounded) in 2018 to 14.27
million in 2019, and 10.1 million in 2020.
The number of checks rose thereafter slightly to 10.17 million in 2021,
and 10.27 million in 2022. Hence the use
of checks has declined significantly over the past five years by about 58
percent.
Looking at 2023, one notes that the number of checks has
risen in the second quarter (1.59 million) relative to the first quarter (1.55
million checks). The total value of checks in circulation is JD9.77 billion in
the Q2 of 2023, up by JD499 million from Q1 2023. The value per check has also
increased from JD592 to JD614.
As to bounced checks, the number has decreased in absolute
numbers from 51800 checks in Q1 to 50600 checks in Q2; however, as a percentage
of total checks, there was a slight increase from 0.334 percent bounced checks
to 0.375 percent. The good news is that
the value per bounced check has declined from JD6158 to JD4916.
One possible explanation for the decline in the use of
checks provided by the CBJ is that alternative and more efficient payment
methods to checks have grown in popularity in recent years. Hence, according to
this explanation, the dominance of checks as a means of payment is finally
being challenged in Jordan. But the negative trend stopped after 2020 as the
number of checks began to increase, albeit at a slow pace. How can one explain
such an anomalous trend using the simple explanation provided by the CBJ?
There may be another less conspicuous reason for such a
pattern. In the years of 2018 – 2020, the per capita income in Jordan declined
by 0.5 percent in 2018, 0.5 percent in 2019, and 3.7 percent in 2020. It’s also
important to not that 2020, where the greatest decline in check usage occurred,
also saw the greatest decrease in per capita income. On the other hand, 2021
and 2022 were years of positive growth in per capita income, 0.2 percent and
1.3 percent respectively, also witnessed a slight rise in the number of checks
in circulation. Consequently, one could deduce that the number of checks in
circulation per year correlates with the per capita income in Jordan, a
correlation that is worth pursuing.
Given that data on the number and value of checks in Jordan
is readily available, while the per capita income takes longer to estimate, it
is worth using the number and value of checks as coincident indicators to
predict the direction of the economy. The ease of determination makes such a
tool almost a costless planning instrument that provides readily available
indications of the direction of the economy.
Yusuf Mansur is CEO of the Envision Consulting Group and former minister of state for economic affairs.
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