Financial inclusion is aimed at introducing the undeserved segment of the community to the official financial institutions. It is without doubt that financial inclusion is one of the sustainable development goals to raise the poor's living standards by availing banking services that are not limited to loan acquisition. In this respect, this study aims at testing the relationship between the most used financial inclusion indicators and the ratio of the provision for loan losses to net loan as a proxy for credit risk. Using the Least Square Dummy Variables (LSDV) as estimation equation for non-linear model, it is found that borrowing from financial institutions or through credit card in labour force affects credit risk negatively. Meanwhile debit card ownership affects credit risk positively. Applying these results on the MENA region as the thesis's geographic scope, the countries the most affected by credit risk as a result of financial inclusion programs are Algeria, Egypt, Iraq, Jordan, Kuwait, Libya, Morocco, Syria, Tunisia, UAE, and Yemen. Moreover, post the addition of the longevity effect to the regression equation, these countries need to accumulate enough reserve for loan losses for at least three years. In the light of having two opposing teams in the literature, the thesis is more inclined towards the team supporting financial inclusion as having a positive effect on banks' stability but on the long term.


Management Department

Degree Name

MS in Finance

Graduation Date

Spring 5-23-2020

Submission Date

May 2020

First Advisor

Bouaddi. Eldomiaty

Second Advisor

Mohamed, Tarek

Third Advisor


Committee Member 1

Basuony, Mohamed

Committee Member 2

Ahmed, Neveen

Committee Member 3



64 p.

Document Type

Master's Thesis

Library of Congress Subject Heading 1


Institutional Review Board (IRB) Approval

Approval has been obtained for this item

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