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Are financial inclusion and bank stability friends or enemies? Evidence from MENA banks

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  • Abdelaziz Hakimi
  • Rim Boussaada
  • Majdi Karmani

Abstract

This study investigated the effect of financial inclusion on bank stability in the Middle East and North Africa (MENA) region. To achieve this goal, we used a sample of MENA banks for the 2004–2017 period, and we performed system-generalized method of moments (SGMM) as an empirical approach. Overall, the empirical findings indicate that greater financial inclusion significantly increases bank stability. As bank specifics, we found that bank stability is more sensitive to an increase in the non-performing loans (NPLs) ratio and bank size. However, a sufficient level of liquidity significantly increases bank stability. Finally, the results show that bank stability could benefit from a stable macroeconomic environment.

Suggested Citation

  • Abdelaziz Hakimi & Rim Boussaada & Majdi Karmani, 2022. "Are financial inclusion and bank stability friends or enemies? Evidence from MENA banks," Applied Economics, Taylor & Francis Journals, vol. 54(21), pages 2473-2489, May.
    • Handle: RePEc:taf:applec:v:54:y:2022:i:21:p:2473-2489
    DOI: 10.1080/00036846.2021.1992342
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    Cited by:

    1. Damane, Moeti & Ho, Sin-Yu, 2024. "The impact of financial inclusion on financial stability: review of theories and international evidence," MPRA Paper 120369, University Library of Munich, Germany.

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