Effect of Bank Facilities on Employment: An Approach Based on STR Model

This study aimed to evaluate the role of the banking system, particularly monetary policies and the provision of bank facilities, in recession and boom periods, on employment in the labour market. The study considered several key variables, including employment, the bank and financial development index, the volume of facilities provided to the private sector, the bank facilities rate, the wage rate, the workforce, capital stock, liquidity, the degree of economic openness, the inflation rate, direct foreign investment, government expenditures, and oil revenues. The research utilized the smooth transfer regression (STR) model to assess the relationship between these variables from 1989 to 2016. The findings revealed a nonlinear correlation between banking variables and employment. Within the nonlinear model, it was observed that a 2.87% increase in the inflation rate had a significant and distinct impact on employment in relation to banking indexes such as money market development, the volume of facilities granted, and liquidity. The study identified a weak effect of monetary policy indicators and bank facilities on employment in the country, highlighting an inadequate association between monetary policies and workforce supply and demand in the national labour market.