Socio-economic issues and bank stability: The moderating role of competition

Syed Waqar Akbar, Ajid Ur Rehman, Elie Bouri, Muhammad Shahzad Ijaz and Imran Arshad

Research in International Business and Finance, 2024, vol. 71, issue C

Abstract: Bank stability has emerged as an area of colossal importance for economic and social well-being, especially in the aftermath of the global financial crisis of 2007–2008. Therefore, this paper examines the impact of socio-economic factors like corruption, political risk, and financial inclusion on the stability of banks. It also investigates whether bank competition interacts with socio-economic factors for the impact on bank stability. Through the use of a dynamic panel estimator and international bank data on country-level indicators spanning 139 nations from 2011 to 2021, our findings indicate that political risk and corruption impede bank stability while financial inclusion promotes it. Subsequent, investigation reveals that competition lessens the detrimental impact of corruption on bank stability while enhancing the stabilizing effects of financial inclusion and political risk. These findings have implications for regulators, government, and bank management in achieving social welfare and bank stability simultaneously.

Keywords: Bank stability; competition; corruption; financial inclusion; political stability; social well-being (search for similar items in EconPapers)
JEL-codes: D73 G18 G21 G28 I38 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:71:y:2024:i:c:s0275531924002423

DOI: 10.1016/j.ribaf.2024.102449

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