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<p>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.</p>

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

  • 期刊论文

  • 出版模式：

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  • 发表日期：

    2026年5月9日

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  • Faisal Alnori,
  • Ali Shaddady

摘要

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.