Since the global financial crisis of 2007–2009, there has been growing evidence pointing to a disappearing, and even adverse, effect of financial sectors at high levels of spread and growth could be damaged by too much finance. This study shifts attention to labor market outcomes and investigates whether high levels of financial development lead to unemployment. Hence, the study empirically investigates the financial development effect on unemployment in Egypt. Using annual data for the sample period of 1990–2021, and with utilizing the Autoregressive Distributed Lag (ARDL), bound test, and the short-term error correction test (ECM) to examine the short and long-run effects. Nevertheless, the study has perceived the first empirical evidence within time-series analysis of the effect that financial development exerts on unemployment in Egypt. In particular, the domestic credit to the private sector has a negative effect on unemployment. Stock market capitalization has a positive effect on unemployment, while the lending-deposit spread did not exert any significant effect on unemployment in Egypt. Based on this base, proposed policies were included to promote the financial development associated with decreased unemployment rates more effectively.