Work

Assessing the impact of ESG on bank stability: new evidence using linear, quantile, and CAMELS-DEA methods

Year: 2026

Type: article

Abstract: 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.

Source: Humanities and Social Sciences Communications

DOI: 10.1057/s41599-026-07509-0

Authors: Faisal Alnori, Ali Shaddady

Institution: King Abdulaziz University

Language: English

Topic: Corporate Social Responsibility Reporting

Subfield: Strategy and Management

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: gold

Estimated APC paid: $1,890

Funder: King Abdulaziz University