Abstract

Objectives: This study analyzes how enhancing financial inclusion affects the financial performance of local banks in Palestine. Methods: The study employed a quantitative analysis approach, using data collected from local banks covering the period from 2006 to 2023. Results: The study concluded that financial inclusion has a significant impact on the banking performance of the sampled banks. Specifically, the findings indicate that banking penetration has a significant and positive effect on bank performance across all tests. However, when considering the variable of SME loans, the impact remained positive but was statistically insignificant in some tests. Conclusions: The study found that enhancing financial inclusion indicators such as banking penetration and credits to SMEs could improve the bank's performance as measured by operating profit and net interest margin.