The Links Between Banking Theories and Financial Inclusion: A Theoretical Framework

Abstract

This paper will present and discuss the theories related to the banks, as financial intermediation playing a significant role in enhancing financial inclusion. Furthermore, trying to link the target of financial inclusion with banks target to enhance their performance, decreasing risk to maximizing the stockholder’s wealth. Meanwhile, this paper will present three main theories behind banks and link them to financial inclusion; Financial Intermediation Theory of Banking; Fractional Reserve Theory of Banking; The Credit Creation Theory of Banking.