Banking Deregulations and Unemployment in South Asia

Zakaria, Muhammad; Risalat, Rida; Fida, Bashir Ahmad

doi:10.11130/jei.2015.30.4.799

Cited by 5 publications

(6 citation statements)

References 23 publications

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“…Hence, it is expected that a negative relationship will exist between banking system credit and unemployment rate. Muhammad, Rida and Bashir (2015), Göçer (2013), Feldman (2012), Shabbir et al (2012), Ordine and Rose (2008) and Bernanke and Blinder (1992) have all confirmed the economic theory that banking system credit has a negative relationship with unemployment rate. For the purpose of this study, the domestic credit provided by banks as a percentage of GDP is used as a measure of banking system credit.…”

Section: Banking System Creditmentioning

confidence: 60%

“…The estimated result revealed that rising credit has a negative effect on the unemployment rate in these countries. Using panel data for the period of 1991 to 2005 in South Asian countries, Muhammad, Rida and Bashir (2015) empirically assessed the influence of banking deregulations on overall and youth unemployment rates.…”

Section: Banking System Credit and Unemployment Rate: Theoretical And...mentioning

confidence: 99%

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The determinants of unemployment rate in developing economies: does banking system credit matter?

Azolibe

Dimnwobi²,

Uzochukwu-Obi³

2022

JEAS

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PurposeIn developing countries, banks play a major role by acting as a conduit for the effective mobilization of funds from the surplus sectors of an economy for onward lending to the deficit sectors for productive investments that will in turn increase the level of employment and economic growth. There has being a rising trend in unemployment rate in Nigeria and South Africa and hence, the need for the study to assess the effectiveness of banking system credit in curbing unemployment rate by making a comparative analysis of Nigeria and South Africa covering the period of 1991–2018.Design/methodology/approachThe study employed the unit root test, Johansen cointegration test, vector error correction model and VAR impulse response function in determining the relationship between the variables.FindingsThe major findings revealed that banking system credit matters in curbing unemployment rate in South Africa than in Nigeria. Also, other macroeconomic factors such as lending rate, inflation rate, Government expenditure and population growth were significant enough in influencing unemployment rate in South Africa than in Nigeria. Foreign direct investment was a significant factor in reducing unemployment rate in Nigeria than in South Africa. The cointegration test showed a long-term relationship between the variables in both countries while the speed of adjustment coefficient of the vector error correction model is faster in South Africa than in Nigeria.Originality/valuePrevious empirical studies on the relationship between banking system credit and unemployment rate have focused much on other regions such as Asia and Europe. Thus, the study is unique as it focused on the African region and also made a comparative analysis by testing the Keynesian theory of employment, interest and money on two emerging African economies which are Nigeria and South Africa.

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Section: Banking System Creditmentioning

confidence: 60%

Section: Banking System Credit and Unemployment Rate: Theoretical And...mentioning

confidence: 99%

The determinants of unemployment rate in developing economies: does banking system credit matter?

Azolibe

Dimnwobi²,

Uzochukwu-Obi³

2022

JEAS

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“…Suyunov (2022) reveals that bank financing can enhance economic growth and reduce unemployment in Uzbekistan. Furthermore, Zakaria et al (2015), employing panel data from South Asian countries from 1991 to 2005, found a positive impact of banking deregulation and bank financing on reducing unemployment. Suyunov (2022) and Zakaria et al (2015) provide evidence that banking intermediation through capital accumulation and the distribution of financing positively affects job creation, thereby reducing the unemployment rate.…”

Section: Literature Reviewmentioning

confidence: 99%

“…While existing studies generally demonstrate a positive impact of bank financing on unemployment, it is necessary to note that Sipahutar (2016), Suyunov (2022), and Zakaria et al (2015) primarily focused on conventional banking. Limited evidence exists regarding the relationship between Sharia-compliant financing provided by Islamic banking and unemployment.…”

Section: Literature Reviewmentioning

confidence: 99%

Implications of Sharia-compliant financing trade-offs on unemployment and growth

Yuli

Rofik

2023

Public and Municipal Finance

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As a Muslim-majority country, Indonesia possesses significant potential to harness Islamic banking as a key driver of its economy. This study aims to examine the effects of Sharia-compliant financing provided by Islamic banks in Indonesia on the unemployment rate and economic growth. The analysis utilizes data on Sharia-compliant financing for non-bank third parties, open unemployment rate, and gross regional domestic product at constant prices as proxies for economic growth. Annual panel data from 33 provinces in Indonesia covering 2010 to 2021 are employed. The analysis employs a fixed-effect regression model using the generalized least squares (GLS) estimator. The findings of this study indicate that Sharia-compliant financing has a positive impact on reducing the unemployment rate and fostering economic growth. However, it is observed that the effectiveness of Sharia-compliant financing in reducing unemployment diminishes as the share of such financing increases. Conversely, a higher market share of Sharia-compliant financing is associated with a more significant role in promoting economic growth. These findings highlight a trade-off between the impact of Sharia-compliant financing on growth and unemployment, suggesting that although growth driven by Sharia-compliant financing in Indonesia is present, it may need more inclusivity and more optimal job creation.

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“…Explanatory variables of unemployment depended onBui (2020),Ciftcioglu and Bein (2017),Kilic and Ozcan (2018),Nasir et al (2021),Sipahutar et al (2016),Zakaria et al (2015),Ernst (2019),Brendan and Alan (2018),Nyasha et al (2021),Olowu et al (2019),Ciftcioglu and Bein (2017) andCicchiello et al (2021). World Development Indicators is the secondary data source used in this study.…”

mentioning

confidence: 99%

Financial Development, Renewable Energy and Unemployment in North Africa

Tsaurai

2022

JAFEE

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Purpose: The study examined the nexus between financial sector development, renewable energy usage and unemployment (UNEMP) in North African countries. The complementarities between (1) financial development (FIN) and renewable energy usage and (2) economic growth and financial development, and their influence on unemployment was also investigated within the context of North African countries. Design/Methodology/Approach: Panel data (1992-2019) analysis methods such as fixed effects, fully modified ordinary least squares (FMOLS) and pooled ordinary least squares (OLS) were used. Findings: Financial sector development had a significant unemployment reduction influence. Complementarity variables were also noted to have significantly reduced unemployment. Implications/Originality/Value: North African countries should therefore craft, develop and implement financial development, renewable energy usage (RENEW) and economic growth enhancement strategies and policies to increase job creation capacity.

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Banking Deregulations and Unemployment in South Asia

Cited by 5 publications

References 23 publications

The determinants of unemployment rate in developing economies: does banking system credit matter?

The determinants of unemployment rate in developing economies: does banking system credit matter?

Implications of Sharia-compliant financing trade-offs on unemployment and growth

Financial Development, Renewable Energy and Unemployment in North Africa

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