Pathways to Prosperity: Unpacking Financial Inclusion's Influence on Bank Performance and Risk

Financial inclusion is a crucial phenomenon in the current period of development since it drives economic progress in all countries. This article seeks to determine the impact of financial inclusion on banks' performance and risk. This research paper aims to ascertain the impact of financial inclusion on banks' profitability and risk. The study spanned a duration of five years, including from 2018 to 2022, and focused on Pakistani commercial listed banks. A systematic investigation was conducted by gathering data on variables from official websites and financial reports. Regression analysis was used to analyze the data. The findings indicate that the bank's profitability is positively influenced by financial inclusion, but at the same time, it also raises the bank's risk. This suggests that policy synergies are necessary to expedite both financial inclusion and sustainability. However, it is crucial to address the intricate issue of financial inefficiency and the absence of genuine paperwork that arises when financial inclusion expands.