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The effect of financial inclusion on unemployment reduction - evidence from non-oil producing Arab countries

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  • Nooh Alshyab
  • Serena Sandri
  • Demeh Daradkah

Abstract

The non-oil producing Arab countries of the Middle East and North Africa are suffering from chronic high unemployment rates, especially among the youth. The availability of affordable and secure financial services is considered as one of the pillars for generating economic growth, stimulating job creation and reducing unemployment. This study investigates the link between financial inclusion and unemployment in non-oil exporting Arab countries. This is done via estimating an index for financial inclusion from 2008 to 2018 for Egypt, Jordan, Lebanon, Morocco, and Tunisia based on the methodology developed by Sarma. The estimated index reveals an overall average-to-low level of financial inclusion. The effect of financial inclusion on unemployment is then tested based on a modified version of Okun's law. The results of a random effect model reveal a significant negative effect both of financial inclusion and of real output growth on unemployment.

Suggested Citation

  • Nooh Alshyab & Serena Sandri & Demeh Daradkah, 2021. "The effect of financial inclusion on unemployment reduction - evidence from non-oil producing Arab countries," International Journal of Business Performance Management, Inderscience Enterprises Ltd, vol. 22(2/3), pages 100-116.
    • Handle: RePEc:ids:ijbpma:v:22:y:2021:i:2/3:p:100-116
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    Cited by:

    1. Mohammad Ajmal Hameed & Mohammad Mafizur Rahman & Rasheda Khanam, 2023. "Analyzing the Consequences of Long-Run Civil War on Unemployment Rate: Empirical Evidence from Afghanistan," Sustainability, MDPI, vol. 15(8), pages 1-21, April.

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