THE IMPACT OF FINANCIAL INCLUSION ON UNEMPLOYMENT RATE IN DEVELOPING COUNTRIES

Financial inclusion has become the focus of economic policymaking worldwide. Increasing accessibility weaker group society to formal financial services would not only serve at individual level but will also benefit national level. This study aims initially construct a new index for 43 developing countries based on multidimensional approach, using Principal Component Analysis (PCA), three dimensions; access to, usage of, and quality services. Secondly, dynamic two-step system, Generalized Method Moments (GMM), is applied empirically assess impact unemployment rate 35 sample period from 2009 2018. The established that an decreasing in countries. empirical findings suggest increase decreases their rate. Moreover, education, inflation rate, growth have significant negative On other hand, panel Granger Causality test was employed indicated there bi-directional causality between rate.Keywords: inclusion, countries, PCA, system GMM, Causaliy test.JEL Classifications: C33, E24, O11, O16DOI: https://doi.org/10.32479/ijefi.10871