Impact of Financial Development on Unemployment: An Empirical Evidence from South Asian Countries
Author(s)
Amaar Hussain Memon , Dr. Arifa Bano Talpur , Iqra Latif Arain , Sayed Zaheer A Bukhari ,
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Abstract
Financial development play important role in reducing unemployment from country’s economy. This study examines the impact of financial development on unemployment in eight South Asian countries i.e. Pakistan, India, Bangladesh, Nepal, Srilanka, Maldive, Bhutan and Afghanistan. The penal data collected from World Bank for the period of 2004 to 2018. Three major proxies of financial development has been used as independent variables: Domestic Credit to Private Sector, Broad Money (M2), Domestic Credit Provided by Banks. For Unemployment, unemployment rate has been used as dependent variable. For control variables: FDI, Education and GDP per capita have been used. Fixed effect penal regression model has been applied. After analysis, it is found that financial development has positive impact on unemployment in South Asian Countries. However, FDI, Education and GDP per capita have negative relationship with unemployment. Therefore, this study recommends that financial development has to be increased up to the threshold level, so it can affect the unemployment in negative directions.
Keywords
Financial Development, Unemployment, South Asian Countries, Fixed effect penal data.
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