The Role of Financial Inclusion in Enhancing the Effectiveness of the Money Supply

Abstract

Financial inclusion in the international community at the present time is of great importance and is one of the most important developments that took place in the past years, and although financial inclusion in Iraq is still below the level of ambition, it has become clear that there is a positive significance effect on the money supply as it is one of the most important monetary policy variables. Whenever financial inclusion is high, there will be an increase in the amounts deposited in the banking system through an increase in deposits, i.e. decreasing cash in the informal sector and increasing it in the formal sector. The aggregate regression model (OLS, the fixed effects model (LSDV) and the random effects model (EGLS) were used. (Where the results were significant and there is an effect of financial inclusion in the money supply. This paper will study financial inclusion in depth and money supply, which is one of the monetary policy variables, and the impact that financial inclusion has on money supply.