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An Empirical Investigation into the Relationship between Financial Sector Development and Unemployment in Nigeria

Haruna Mohammed Aliero, Saifullahi Sani Ibrahim () and Mukhtar Shuaibu
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Haruna Mohammed Aliero: Department of Economics, Faculty of Social Sciences, Usmanu Danfodiyo University Sokoto, Nigeria
Mukhtar Shuaibu: Department of Economics, Faculty of Social Sciences, Usmanu Danfodiyo University Sokoto, Nigeria

Asian Economic and Financial Review, 2013, vol. 3, issue 10, 1361-1370

Abstract: Financial sector development has been identified by financial economists as a veritable way of empowering the poor thereby paving the way for enabling them to become employed and possibly serve as economic agents of change. This study empirically investigates the relationship between financial sector development and unemployment in Nigeria. A time series data was generated from 1980 to 2011 period. Auto Regressive Distributed Lag (ARDL) Bound Testing technique for cointegration was applied to estimate the long run relationship. The study found that there has been persistent unemployment in Nigeria, while formal credit allocation in rural areas has both short run and long run effect of reducing unemployment. Also found in this study is that expansionary monetary measures did not fuel inflation significantly. The study therefore recommends that monetary authority should strengthen and deepen financial services industry, particularly, Deposit Money Banks, to provide necessary financial support to the teeming unemployed youth in the country.

Keywords: Financial development; Financial system; Nigeria; Youth unemployment; Error correction model. (search for similar items in EconPapers)
Date: 2013
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