Financial innovation and unemployment: does digital finance reduce joblessness in Nigeria?
Abstract
This paper examines the relationship between financial innovation and unemployment in Nigeria from 1993 to 2023, utilizing data from the Central Bank of Nigeria and World Development Indicators. It employs an Autoregressive Distributed Lag (ARDL) model to analyze both short- and long-term effects. The results indicate that increased internet usage is associated with reduced unemployment in the short term, facilitating job searches and online entrepreneurship. Short-term usage of mobile money transactions correlates positively with unemployment due to initial adjustments during the digital payment adoption phase. Conversely, in the long term, mobile money negatively impacts unemployment as persistent lagged effects contribute to job creation and financial inclusion. GDP growth is found to decrease unemployment rates in both timeframes, affirming its role as a crucial driver of job opportunities. Inflation shows limited effects on unemployment, with a slight positive short-term relationship indicating temporary employment challenges amid rising prices. The study highlights the importance of financial innovation and macroeconomic stability in reducing unemployment and recommends strategies such as improving internet access, enhancing digital literacy, promoting mobile money usage, supporting economic growth, and implementing policies aimed at financial inclusion.
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Adewale, A. A., & Adeyemo, A. A. (2024). Effect of unemployment and inflation on Nigerian economic growth: a time-series analysis. The Journal of VN Karazin Kharkiv National University. Series: International Relations. Economics. Country Studies. Tourism, (19), 47-56. https://doi.org/10.26565/2310-9513-2024-19-05
Adewale, A. A., & Sanni, O. (2025). Pos Business and Fraud: How Are They Shaping Employment in Nigeria? Bahria University Journal of Management and Technology (BJMT), 9(1), 72-87. https://doi.org/10.62533/m4c9yy52
Adewale, A. A., (2024). The Impact of Electronic Banking Channels on The Financial Inclusion in Nigeria. Gomal University Journal of Research, 40(4), 426-441. https://doi.org/10.51380/gujr-40-04-03
Adewale, A. A., Shittu, S. A., & Agyemang, J. K. (2025). Exploring the Role of Digital Payment Channels in Mitigating Unemployment. Journal of Business and Social Review in Emerging Economies, 11(3). https://doi.org/10.26710/jbsee.v11i3.3507
Adewole, J. A., Attah, E. V., Adewale, A. A., & Idih, O. E. (2022). Effect Of Point of Sale (Pos) Business on Employment Generation in Nigeria. Unizik Journal of Entrepreneurship (ENTREP), 3(2), 145-156 https://unizikentrepjournal.com.ng/index/index.php/Journal/article/view/75
Augustine, O. O., Jonah, O., Chinedu, E. C., Victor, N. A., & Onuabuchi, N. E. (2023). Point of Sale (POS) and Job Creation in Enugu State, Nigeria: A Study of Nsukka Urban, 2012-2021. Central Asian Journal of Social Sciences and History, 4(9), 172-192 https://doi.org/10.51699/cajssh.v4i9.884
Ayalew, M. M., & Xianzhi, Z. (2020). The effect of financial constraints on innovation in developing countries: Evidence from 11 African countries. Asian Review of Accounting, 28(3), 273-308. https://doi.org/10.1108/ARA-02-2019-0036
Effiom, L., & Edet, S. E. (2022). Financial innovation and the performance of small and medium scale enterprises in Nigeria. Journal of Small Business & Entrepreneurship, 34(2), 141-174 https://doi.org/10.1080/08276331.2020.1779559
Hall, R. E., & Kudlyak, M. (2022). The unemployed with jobs and without jobs. Labour Economics, 79, 102244. https://doi.org/10.1016/j.labeco.2022.102244
Law, C. H., & Law, S. H. (2024). The non‐linear impacts of innovation on unemployment: Evidence from panel data. International Journal of Finance & Economics, 29(1), 402-424. https://doi.org/10.1002/ijfe.2691
Mookerjee, J., Bhuriya, M. K., Josphin, R., & Radhakrishnan, G. V. (2025). Digital banking and financial inclusion in rural economies. Digit Bank Financ Incl Rural Econ, 26(1), 954-963. https://doi.org/10.70135/seejph.vi.3797
Nejad, M. G. (2022). Research on financial innovations: an interdisciplinary review. International Journal of Bank Marketing, 40(3), 578-612. https://doi.org/10.1108/IJBM-07-2021-0305
Okeke, C. T., Ifebi, O. E., & Ekesiobi, C. S. (2023). Financial Inclusion and Unemployment In Nigeria. Journal of Advanced Research in Economics and Administrative Sciences, 4(4), 28-47 https://doi.org/10.47631/jareas.v4i4.639
Pasichnyk, T. O. (2025). Innovation And Technological Unemployment in Ricardo’s Theory of Economic Growth. Natsional'nyi Hirnychyi Universytet. Naukovyi Visnyk, (5), 199-207. https://doi.org/10.33271/nvngu/2025-5/199
Purnamasari, R., Hasanudin, A. I., Zulfikar, R., & Yazid, H. (2025). Technological infrastructure and financial resource availability in enhancing public services and government performance: The role of digital innovation adoption in Indonesia. Social Sciences & Humanities Open, 11, 101621 https://doi.org/10.1016/j.ssaho.2025.101621
Raji, R. O. (2020). Globalization and Technological Innovation: Which Impact on the Rise of Unemployment? Risk and Financial Management, 2(2), p73-p73. https://doi.org/10.30560/rfm.v2n2p73
Tochukwu, E., Eze, E. A., & Okoye, M. I. (2025). Financial Development and Unemployment Rate in Nigeria. NAU Eco Journals, 22(2), 56-74
Wu, W., Hon-Wei, L., Yang, S., Muda, I., & Xu, Z. (2023). Nexus between financial inclusion, workers’ remittances, and unemployment rate in Asian economies. Humanities and Social Sciences Communications, 10(1), 1-10. https://doi.org/10.1057/s41599-023-02133-8
Yermoshkina, O. V., Makurin, A. A., & Doroshenko, L. V. (2025). Financial innovation and unemployment in the financial sector: what is the base?. Economic Bulletin of the National Mining University scientific journal, 90(90), 160-166. https://doi.org/10.33271/ebdut/90.160
Yildirim, D. Ç., Yildirim, S., Erdogan, S., & Kantarci, T. (2022). Innovation—Unemployment nexus: The case of EU countries. International Journal of Finance & Economics, 27(1), 1208-1219. https://doi.org/10.1002/ijfe.2209
Adewale, A. A., & Adeyemo, A. A. (2024). Effect of unemployment and inflation on Nigerian economic growth: a time-series analysis. The Journal of VN Karazin Kharkiv National University. Series: International Relations. Economics. Country Studies. Tourism, (19), 47-56. https://doi.org/10.26565/2310-9513-2024-19-05
Adewale, A. A., & Sanni, O. (2025). Pos Business and Fraud: How Are They Shaping Employment in Nigeria? Bahria University Journal of Management and Technology (BJMT), 9(1), 72-87. https://doi.org/10.62533/m4c9yy52
Adewale, A. A., (2024). The Impact of Electronic Banking Channels on The Financial Inclusion in Nigeria. Gomal University Journal of Research, 40(4), 426-441. https://doi.org/10.51380/gujr-40-04-03
Adewale, A. A., Shittu, S. A., & Agyemang, J. K. (2025). Exploring the Role of Digital Payment Channels in Mitigating Unemployment. Journal of Business and Social Review in Emerging Economies, 11(3). https://doi.org/10.26710/jbsee.v11i3.3507
Adewole, J. A., Attah, E. V., Adewale, A. A., & Idih, O. E. (2022). Effect Of Point of Sale (Pos) Business on Employment Generation in Nigeria. Unizik Journal of Entrepreneurship (ENTREP), 3(2), 145-156 https://unizikentrepjournal.com.ng/index/index.php/Journal/article/view/75
Augustine, O. O., Jonah, O., Chinedu, E. C., Victor, N. A., & Onuabuchi, N. E. (2023). Point of Sale (POS) and Job Creation in Enugu State, Nigeria: A Study of Nsukka Urban, 2012-2021. Central Asian Journal of Social Sciences and History, 4(9), 172-192 https://doi.org/10.51699/cajssh.v4i9.884
Ayalew, M. M., & Xianzhi, Z. (2020). The effect of financial constraints on innovation in developing countries: Evidence from 11 African countries. Asian Review of Accounting, 28(3), 273-308. https://doi.org/10.1108/ARA-02-2019-0036
Effiom, L., & Edet, S. E. (2022). Financial innovation and the performance of small and medium scale enterprises in Nigeria. Journal of Small Business & Entrepreneurship, 34(2), 141-174 https://doi.org/10.1080/08276331.2020.1779559
Hall, R. E., & Kudlyak, M. (2022). The unemployed with jobs and without jobs. Labour Economics, 79, 102244. https://doi.org/10.1016/j.labeco.2022.102244
Law, C. H., & Law, S. H. (2024). The non‐linear impacts of innovation on unemployment: Evidence from panel data. International Journal of Finance & Economics, 29(1), 402-424. https://doi.org/10.1002/ijfe.2691
Mookerjee, J., Bhuriya, M. K., Josphin, R., & Radhakrishnan, G. V. (2025). Digital banking and financial inclusion in rural economies. Digit Bank Financ Incl Rural Econ, 26(1), 954-963. https://doi.org/10.70135/seejph.vi.3797
Nejad, M. G. (2022). Research on financial innovations: an interdisciplinary review. International Journal of Bank Marketing, 40(3), 578-612. https://doi.org/10.1108/IJBM-07-2021-0305
Okeke, C. T., Ifebi, O. E., & Ekesiobi, C. S. (2023). Financial Inclusion and Unemployment In Nigeria. Journal of Advanced Research in Economics and Administrative Sciences, 4(4), 28-47 https://doi.org/10.47631/jareas.v4i4.639
Pasichnyk, T. O. (2025). Innovation And Technological Unemployment in Ricardo’s Theory of Economic Growth. Natsional'nyi Hirnychyi Universytet. Naukovyi Visnyk, (5), 199-207. https://doi.org/10.33271/nvngu/2025-5/199
Purnamasari, R., Hasanudin, A. I., Zulfikar, R., & Yazid, H. (2025). Technological infrastructure and financial resource availability in enhancing public services and government performance: The role of digital innovation adoption in Indonesia. Social Sciences & Humanities Open, 11, 101621 https://doi.org/10.1016/j.ssaho.2025.101621
Raji, R. O. (2020). Globalization and Technological Innovation: Which Impact on the Rise of Unemployment? Risk and Financial Management, 2(2), p73-p73. https://doi.org/10.30560/rfm.v2n2p73
Tochukwu, E., Eze, E. A., & Okoye, M. I. (2025). Financial Development and Unemployment Rate in Nigeria. NAU Eco Journals, 22(2), 56-74
Wu, W., Hon-Wei, L., Yang, S., Muda, I., & Xu, Z. (2023). Nexus between financial inclusion, workers’ remittances, and unemployment rate in Asian economies. Humanities and Social Sciences Communications, 10(1), 1-10. https://doi.org/10.1057/s41599-023-02133-8
Yermoshkina, O. V., Makurin, A. A., & Doroshenko, L. V. (2025). Financial innovation and unemployment in the financial sector: what is the base?. Economic Bulletin of the National Mining University scientific journal, 90(90), 160-166. https://doi.org/10.33271/ebdut/90.160
Yildirim, D. Ç., Yildirim, S., Erdogan, S., & Kantarci, T. (2022). Innovation—Unemployment nexus: The case of EU countries. International Journal of Finance & Economics, 27(1), 1208-1219. https://doi.org/10.1002/ijfe.2209
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