The Role of the Central Bank in the System of Troubled Banks under Jordanian Law "Comparative Study"

Abstract

This study examines the concept and causes of banking distress and the mechanisms for its resolution under Jordanian and Egyptian law, with emphasis on the role of central banks. Using a comparative analytical approach, it analyzes the Jordanian Banking Law, the Law of the Jordan Deposit Insurance Corporation, and the Egyptian Central Bank and Banking System Law.

The findings show that Jordanian law does not explicitly define banking distress but only regulates its resolution, which may result from administrative, political, economic, or legal factors. The study recommends codifying detailed procedures for resolving distressed banks in the Jordanian Banking Law, similar to the Egyptian model under Chapter Twelve of the Central Bank and Banking System Law, to clarify cases of distress, their consequences, and mechanisms to avoid liquidation

Keywords banks, central bank, banking default, default treatment