The Effect of Macroeconomic Variables on the Asset Positions and Financial Performance of Non-Banking Financial Institutions (NBFIs) in Jamaica

The aim of the paper is to evaluate effect macroeconomic variables such as real GDP, unemployment levels, bond yields, stock market growth, and interest rate on asset positions financial performance non-banking institutions (NBFIs) in Jamaica. This reflected by return (ROA) ratio, equity (ROE) ratio total growth (TA). To explore nature short long-term relationship between dependent independent variables, research used a bound test approach co-integration error correction process using time series data over period from 2005Q1 2020Q3. results showed that gross domestic product (RGDP) (UR) had positive long-run with ROA; government yield (GBY), UR, (IR) (JSEM) influenced ROE positively at long-run; while all causal TA. In short-run estimates, however, minimal relationships among could be identified ROA, Meanwhile, has shown there stable three profitability metrics have significant them. assumes that, event some shock system, model will converge back equilibrium. Furthermore, cumulative sum recursive residuals (CUSUM) checks validated model’s stability.