In my opinion, anyone interested in playing/writing music benefits from studying music theory. Basic theory can be applied across the board to any and all instruments one is attempting to learn, including banjo. Studying theory inspires one to try something more interesting than the time-worn, tedious 3-chord progressions. In teaching music, basic theory plus ear training plus lots of encouragement to be creative can make decent composers out of even the most timid of students. And I've heard plenty of self-taught folksy types who would really benefit from a fundamental understanding of rhythm and metre...and keys... I've heard a lot of people bemoan the fact that they never learned how to read music, but I can't remember one who regretted that they had...and as far as music theory stunting creativity, I guess that depends on who's teaching it and how.
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