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Impact of Financial Inclusion on Unemployment in Sub-Saharan Economies: A Study of Nigeria and Ghana

Okoro, C. E. (PhD); Obiekwe, C. J. (Ph.D); Okoro, O. K

Abstract

This paper was undertaken to empirically investigate the impact of financial inclusion on Sub- Saharan economies referencing Nigeria and Ghana for the period 1985 to 2018. Data was sourced from the World Development Indicator (WDI), Statistical Bulletins of the selected Central Banks and National Bureau of Statistics. Unemployment rate (UNPR) was used proxy for the sampled economies while Commercial banks credit to private sector (BCPS), lending interest rates (LINT), number of rural bank branches (NRBB), Total bank loans to rural dwellers (CBLR), Bank Credit to Agriculture (CBCA) and commercial banks liquidity ratios (LIQR) were financial inclusion proxies. From the data observed on the 2 Sub-Saharan African (SSA) countries and by using the dynamic panel statistical techniques, we were able to show that there exists a significant link between financial inclusion and the sampled economies. The coefficient of determination indicated that about 75 percent of the total variations in unemployment rate are explained by the financial inclusion variables in the model. Consequently, the study recommended that the Central Banks should make policies that will encourage proper checks on the exploitative tendencies of commercial banks so as to lower cost of capital; “Rural Credit Guarantee Scheme (RCGS)” should be established in order to favorably incorporate the interest of rural dwellers into the financial cycle.

References

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