‏ The Financial Inclusion and Unemployment in Urban and Rural Areas of Iran

Subject Areas : Financial Economics

Reza  Maaboudi ¹ (Assistant Professor, Faculty Member of the Department of Economics, Faculty of Humanities, Ayatollah Ozma Borujerdi University, Borujerd, Iran)

Received: 2023-07-22 Accepted : 2023-10-24 Published : 2023-08-23

Keywords: Iran, Financial inclusion, Unemployment in Urban and Rural Areas, Panel-GMM Approach,

Abstract :

The paper aims to investigate the financial inclusion effect on the unemployment rate in urban and rural areas of Iran. Panel generalized method of moments and provincial data from 2015 to 2020 used to analyze the relationships between variables. Findings show that financial inclusion leaves a negative and significant effect on the unemployment rate in urban and rural areas of Iran. On the one hand, financial inclusion increases entrepreneurs’ and economic firms’ access to financial credits by reducing transaction costs and by increasing information transparency, which in turn leads to an increase in production capacity and a decrease in the unemployment rate; On the other hand, increasing the access of low-income people to borrowing leads to an increase in investment in human capital and, as a result, a decrease in the unemployment rate. Also, economic growth and human capital have a negative significant effect, and the real wage has a significant positive effect on the unemployment rate in urban and rural areas of Iran. According to the research results, in order to use the benefits of financial inclusion to reduce unemployment in the country, it is necessary to adopt effective policies in the field of training and increasing the financial literacy of individuals in deprived areas to participate in the financial sector, increasing investment to promote innovative financial technologies, expanding banking hardware and improving the infrastructure of the payment system.

References:

- بالونژاد نوری، روزبه و شجری­پور، شقایق (1400). بررسی رابطه علیت میان رشد اقتصادی و شمول مالی: کاربردی از روش علیت بوت­استرپ، فصلنامه نظریه­های کاربردی اقتصاد، 8(4)، 252-225.

- بالونژاد نوری، روزبه و فرهنگ، امیرعلی (1400). اثر شمول مالی بر کارآیی و پایداری مالی: کاربردی از رویکرد شاخص­سازی چند بعدی، اقتصاد و تجارت نوین، 16(2)، 83-59.

- جعفری، محبوبه و خلیل­نژاد، زهرا (1401). شمول مالی و کیفیت محیط زیست در کشورهای درحال توسعه با بیشترین مقدار آلایندگی: هم­افزایی یا تخریب، فصلنامه مطالعات اقتصاد انرژی، 18(74)، 100-75.

- حیدری، حسن و نیک­پی پسیان (1402). تحلیل فضایی اثر آزادسازی تجاری بر نرخ بیکاری در استان­های ایران، نشریه علمی پژوهشهای اقتصادی (رشد و توسعه پایدار)، 23(1)، 143-113.

- مرکز آمار ایران، سالنامه­های آماری، سال­های مختلف.

- یوسفی، محمدقلی، آماده، حمید و سنگسری، شیما (1398). تاثیر بهره­وری کل عوامل تولید بر اشتغال در صنایع تولیدی ایران، فصلنامه مدلسازی اقتصادی، 13(3)، 157-129.

- Ali, M., Hashmi, S. H., Nazir, M. R., Bilal, A., & Nazir, M. I. (2021). Does financial inclusion enhance economic growth? Empirical evidence from the IsDB member countries. International Journal of Finance & Economics, 26(4), 5235-5258.‏

- Alshyab, N., Sandri, S., & Daradkah, D. (2021). The effect of financial inclusion on unemployment reduction- evidence from non-oil producing Arab countries. International Journal of Business Performance Management, 22(2-3), 100-116.

- Amakor, I. C., & Eneh, O. (2021). Financial Inclusion and Unemployment Rate in Nigeria. International Journal of Research, 8(11), 1-14.

- Atiase, V. Y., Wang, Y., & Mahmood, S. (2019). FNGOs and financial inclusion: Investigating the impact of microcredit on employment growth in Ghana. The International Journal of Entrepreneurship and Innovation, 20(2), 90-106.‏

- Baltagi, B. (2008). Econometric Analysis of Panel Data. 5^th Edition. John Wiley & Sons Publication. USA.

- Charfeddine, L., & Zaouali, S. (2022). The effects of financial inclusion and the business environment in spurring the creation of early-stage firms and supporting established firms. Journal of Business Research, 143, 1-15.‏

- Erlando, A., Riyanto, F. D., & Masakazu, S. (2020). Financial inclusion, economic growth, and poverty alleviation: evidence from eastern Indonesia. Heliyon, 6(10), e05235.

- Eng, K. Y., Law, C. H., & Loke, Y. J. (2018). The Impact of Financial Access on Gender Unemployment: Panel Data Evidence from in 51 developed and developing countries.‏ Borneo Journal of Social Sciences & Humanities, Published: 30 June 2021. https://web.archive.org/web/20210701174611id_/https://journal.ucts.edu.my/Home/ArticleDownload?articleId=BJSSH030108.

- Huang, W., Gu, X., Lin, L., Alharthi, M., & Usman, M. (2023). Do financial inclusion and income inequality matter for human capital? Evidence from sub-Saharan economies. Borsa Istanbul Review, 23(1), 22-33.‏

- Khan, I., & Khan, I. (2023). Financial inclusion matter for poverty, income inequality and financial stability in developing countries: new evidence from public good theory. International Journal of Emerging Markets,‏ Article publication date: 6 March 2023, 10.1108/IJOEM-10-2021-1627.

- Mehry, E. B., Ashraf, S., & Marwa, E. (2021). The impact of financial inclusion on unemployment rate in developing countries. International Journal of Economics and Financial Issues, 11(1), 79-93.‏

- Molefhi, K. (2019). Financial inclusion and its impact on employment creation in Botswana. Working Papers 60, Botswana Institute for Development Policy Analysis. http://knowledge.bidpa.bw:8080/xmlui/handle/123456789/100.

- Nteegah, A. (2021). Financial inclusion and employment generation: Empirical evidence from Nigeria. Asian Journal of Economics, Finance and Management, 3(1), 714-729.‏

- Park, C. Y., & Mercado Jr. R. (2018). Financial inclusion, poverty, and income inequality. The Singapore Economic Review, 63(01), 185-206.‏

- Sakanko, M. A., David, J., & Onimisi, A. M. (2020). Advancing inclusive growth in Nigeria: The role of financial inclusion in poverty, inequality, household expenditure, and unemployment. Indonesian Journal of Islamic Economics Research, 2(2), 70-84.

- Sawadogo, R., & Semedo, G. (2021). Financial inclusion, income inequality, and institutions in sub-Saharan Africa: Identifying cross-country inequality regimes. International Economics, 167, 15-28.‏

- Segning, B. A., Fouopi Djiogap, C., Piabuo, S. M., & Ngasseu Noupie, E. (2023). Financial Inclusion and Income Inequality in Sub-Saharan Africa: Taking Socio-Cultural Particularities into Account. Journal of the Knowledge Economy, 1-24.‏

- Tita, A. F., & Aziakpono, M. J. (2017). The relationship between financial inclusion and income inequality in sub-Saharan Africa: Evidence from disaggregated data. African Review of Economics and Finance, 9(2), 30-65.‏

- Yang, L., & Geng, Z. (2022). Impact of Digital Financial Inclusion on Optimization of Employment Structure: Evidence from China. Applied Economics, 54(57), 6625-6638.