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Financial inclusion in banking: A literature review and future research directions

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  • Peterson Ozili

Abstract

This article presents a synopsis of financial inclusion research in banking. Complementing the existing reviews of the financial inclusion literature, I offer my thoughts on the role of financial inclusion in banking and the role of banks in financial inclusion. I focus my discussion on the effect of bank managerial discretion and regulation on financial inclusion outcomes, as well as the effect of financial inclusion on the banking business. I show that bank managerial discretion and regulation affect financial inclusion through bank cost optimization decisions and regulatory changes that may have unintended consequences. In contrast, financial inclusion affects banks by increasing the deposit base of banks, improving bank profitability, improving banks’ resilience to shocks, improving bank stability, and reducing bank risk. I also offer suggestions for future research directions.

Suggested Citation

  • Peterson Ozili, 2025. "Financial inclusion in banking: A literature review and future research directions," Modern Finance, Modern Finance Institute, vol. 3(1), pages 91-109.
    • Handle: RePEc:bdy:modfin:v:3:y:2025:i:1:p:91-109:id:236
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    Keywords

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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