Impact of digital financial inclusion and technological innovation on unemployment

Fakrul Islam, Mohammad Ashraful Ferdous Chowdhury and Mohammad Abdullah

Journal of Financial Economic Policy, 2026, vol. 18, issue 4, 654-680

Abstract: PurposeThis research explores the relationship between digital financial inclusion, technological innovation and unemployment. This study aims to examine how progress in digital finance and technology influences unemployment rates.Design/methodology/approachDrawing on data from 101 countries covering the years 2004–2020, the study uses several econometric techniques. These include the two-step system generalized method of moments (GMM), two-stage least squares (2SLS), propensity score matching (PSM) and entropy balancing to address concerns related to endogeneity. To ensure the robustness of the results, the analysis also incorporates alternative indicators and conducts subsample analysis for both developed and developing nations.FindingsThe main findings reveal that both digital financial inclusion and technological innovation are significantly associated with lower unemployment rates. These negative effects remain consistent across different models and data subgroups, highlighting the robustness of the results. The use of other methods such as the two-step system GMM, 2SLS, PSM and entropy balancing strengthens the robustness of the conclusions drawn.Originality/valueThis study offers fresh perspectives on how digital finance and technological advancements can serve as tools to combat unemployment. By applying a range of analytical approaches and examining multiple proxy measures, the research delivers a well-rounded analysis of how digital and technological developments relate to labor market outcomes.

Keywords: Digital financial inclusion; Technological innovation; Unemployment; Innovation; Financial inclusion (search for similar items in EconPapers)
Date: 2026
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.emerald.com/jfep/article/18/4/654/1337 ... ancial-inclusion-and (text/html)
https://www.emerald.com/jfep/article-pdf/18/4/654/ ... p-11-2024-0366en.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:jfeppp:jfep-11-2024-0366

DOI: 10.1108/JFEP-11-2024-0366

Access Statistics for this article

Journal of Financial Economic Policy is currently edited by Prof Franklin Mixon

More articles in Journal of Financial Economic Policy from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().