Institutional quality as a moderator of CSR’s effect on bank stability: Evidence from MENA banks

The main objective of this paper is to explore the moderating role of institutional quality (IQ) in the relationship between corporate social responsibility (CSR) and banking stability. Using a panel dataset of banks from the Middle East and North Africa (MENA) region spanning 2010–2022, the analysis employs the system generalized method of moments (SGMM) to mitigate potential endogeneity and heterogeneity issues. The findings reveal that CSR is negatively and significantly associated with bank stability. In contrast, institutional quality has a positive and significant effect on the stability of MENA banks. Moreover, the interaction between CSR and institutional quality further enhances bank stability. This research fills an important gap in the debate on the moderating role of institutional quality in the CSR–bank stability relationship in the MENA region. The study also offers practical insights for policymakers, regulators, and bank executives seeking to promote sustainable banking practices.