Assessing the impact of ESG on bank stability

New evidence using linear, quantile, and Camels-DEA methods

Bibliographic Data

ID22231941
AuthorsFaisal Alnori (0000-0001-6245-2289, King Abdulaziz University, corresponding author), Ali Shaddady (0000-0002-2046-9565, King Abdulaziz University)
Year2026
Volume13
Issue1
Publication date2026-05-09
Open AccessYes
TypeARTICLE
VenueHumanities and Social Sciences Communications (JOURNAL)
Journal identifiersISSN: 2662-9992 • E-ISSN: 2662-9992
PublisherSpringer Science and Business Media LLC (PUBLISHER)
DOI10.1057/s41599-026-07509-0
OpenAlexW7160699222
LanguageEN
References cited57

Existing literature reports competing conclusions on the role of banks’ environmental, social, and governance (ESG) practices on their stability. We rigorously investigate the role of ESG on banks’ stability using parametric methods, consisting of ordinary least squares (OLS) quantile regressions, and non-parametric data envelopment analysis (DEA). The studied sample consists of all listed banks in Saudi Arabia over the years 2016–2021. Our results indicate that banks’ ESG–stability nexuses vary according to the different methods employed: OLS regression result shows a negative nexus between ESG and stability; quantile analysis indicates that ESG exhibits a negative impact on stability across different quantiles. However, the DEA method reveals that banks’ stability is noticeably enhanced after incorporating ESG. The findings have important implications for regulators and bankers and suggest valuable directions for future research. At best, this is the first study that explores the mixed findings of ESG impact on banks’ stability after performing varying methods including OLS, Quantile, and DEA

Payment · Banking stability, regulation, efficiency · Credit Risk and Financial Regulations · Efficiency Analysis Using DEA

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