Abstract
Previous literature supports the view that the financial inclusion leads to economic growth and helps alleviate poverty; however, it is still unclear whether financial inclusion increases bank profitability. The study assumes that financial inclusion is significant in enhancing the economy and minimizing loan accounts, and along with this assumption, the deposit size decreases the Jordanian banks’ profitability despite the fact that the financial services and access to them have no significant influence upon such profitability. The major profitability drivers examined in this study comprised financial inclusion and financial leverage. In this study, 13 Jordanian banks’ data from 2009 to 2019 were examined to determine the above issue. The study applied fixed effects on a panel data regression model. The findings indicated that the number of loan accounts and size of deposits negatively and significantly impacted the profitability of the commercial banks in Jordan. However, the number of branches and ATMs had no significant effect on the bank’s profitability. In sum, both leverage and bank size were the top two determinants of commercial banks’ profitability in Jordan. Based on the findings, Jordanian policymakers can shift their focus to offering affordable financial services that support SMEs’ loans and start-ups.
Highlights
Academic Editor: Robert CzudajSince the financial inclusion concept was introduced in 2005, it has received significant attention from researchers and policymakers (Kumar et al 2021)
Profitability: Does more financial inclusion lead to better financial results? The answer to this question represents the major continuation of this paper, the analysis shows that the impact of financial inclusion on banks’ profitability depends on the type of financial inclusion
This study primarily aims to examine the effect of financial inclusion on the performance of commercial banks listed on the Amman Stock Exchange (ASE) in Jordan
Summary
Academic Editor: Robert CzudajSince the financial inclusion concept was introduced in 2005, it has received significant attention from researchers and policymakers (Kumar et al 2021). Financial inclusion is defined as the availability and equality of opportunities to access financial services. It refers to a process by which individuals and businesses can access appropriate, affordable, and timely financial products and services (Chen et al 2018). It is evident that financial inclusion plays an important role in economic development and the stability of the financial system (Ikram and Lohdi 2015; Ahamed and Mallick 2019). The emergence of smartphones and the Internet has led to increased financial inclusion and increased opportunities for accessing digital financial services (Arun and Kamath 2015; Kanobe et al 2017). According to the database of Global Findex, advances in digital technology are key to achieving the World Bank goal of Universal Financial
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