The Impact of Financial Inclusion on Unemployment in Algeria

Abstract

This research paper investigates the impact of financial inclusion in Algeria on unemployment during the period from 2004 to 2021. The Autoregressive Distributed Lag (ARDL) bounds-testing approach is used to capture the dynamic short-run and long-run relationships between the evolution of the number of automated teller machines (ATMs), the number of commercial bank branches, the share of domestic credit provided to the private sector, and the unemployment rate. The study finds an inverse (negative) relationship between the evolution of the number of ATMs and commercial bank branches on one hand and unemployment in Algeria on the other, over the period studied. As for the share of domestic credit provided to the private sector, a positive relationship with unemployment is observed. A full battery of diagnostic tests (normality, serial correlation, heteroskedasticity, functional form, and parameter stability) is reported to assess the robustness of the estimated model.