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2.3 Agency Theory

Agency theory emphasizes the alignment of interests between agents and principals, highlighting the role of banks in protecting customer liquidity and the benefits of economies of scale. The document discusses how competition and reputation influence banking practices, particularly in the context of technological advancements and deregulation. Additionally, it explores the impact of mobile banking on financial inclusion in developing regions, noting its potential to enhance access to financial services for the unbanked population.

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7 views1 page

2.3 Agency Theory

Agency theory emphasizes the alignment of interests between agents and principals, highlighting the role of banks in protecting customer liquidity and the benefits of economies of scale. The document discusses how competition and reputation influence banking practices, particularly in the context of technological advancements and deregulation. Additionally, it explores the impact of mobile banking on financial inclusion in developing regions, noting its potential to enhance access to financial services for the unbanked population.

Uploaded by

chanakapathirajaw
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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2.

3 Agency Theory

The idea says that agents and principals shouldn't have aims that are at odds with each other and
that they should be able to establish a happy medium between their different levels of risk.
Diamond and Dybvig (1983) suggest that banks protect customers' liquidity levels to protect
them against unusual shocks. Diamond (1984) shows that these coalitions of middlemen may
benefit from economies of scale. The intermediary's role is to watch over the customers' money.
Monitoring leads to higher returns to scale, which may make specialization appealing. Dinç
(2001) looks at how competition in the bond market impacts a bank's reputation mechanism. He
says that the bank's reputation, the number and quality of other banks, and the market for
financial instruments are all reasons why the firm should keep its promise. There is a strong link
between these four factors. Thornton and White (2017) say that when deregulation happened in
1983, most banks had to rethink how they did things so they could fully embrace Internet
technology, since they were under competitive pressure. The research looked at the 8 distribution
channels used by banks in Australia and what customers wanted. Tan and Toe (2019) said that
MFIs need to use Internet technologies well and effectively if they want to retain or grow their
market share. The rise of online banking made several MFIs rethink their IT plans, which in the
end made their operations more efficient.

2.4 The link between mobile banking and financial results

Lee, Lee, and Kim (2017) looked at mobile banking and how Chinese commercial banks handle
their money. They discovered that a lot of individuals in developing nations have mobile phones
but aren't part of the regular banking system. Mobile banking has given banks and other financial
organizations more chances than ever to acquire new clients and make more money. Simpson
(2016) says that one of the main reasons for e-banking is that it may help cut costs and raise
revenue. Tchouassi (2012) looked studied data from a number of Sub-Saharan African countries
to see how well mobile phones might reach people who don't have bank accounts and provide
them more access to financial services. The goal of this study was to find out, "How can we use
mobile phones to help the poor, powerless, and unbanked?" by looking at a number of different
possibilities. Researchers in Sub-Saharan Africa (SSA) found that low-income households had a
hard time doing even the most basic financial tasks because of high cos

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