Mohamed Albaity

Purpose: This study investigates the impact of deposit insurance on bank risk-taking and examines how Islamic banking architectures moderate this relationship in the MENA region's dual banking system. Design/methodology/approach: We apply panel quantile regressions to an unbalanced dataset of 136 commercial banks across 9 MENA countries from 2011 to 2023. The empirical framework uses four distinct risk dimensions: SDROA, POR, a normalized Z-score and ROA. Findings: Deposit insurance significantly reduces bank risk-taking, demonstrating that stabilization benefits dominate classical moral hazard in fragile regimes. This effect is highly asymmetric and concentrates heavily in high-risk tails. Through unique governance and contractual constraints, Islamic banking operations strengthen asset volatility reduction but weaken portfolio asset-shifting trends. Practical implications: Regulators should implement differentiated deposit insurance schemes tailored specifically to the unique risk-sharing properties of Islamic contracts. Overhauling and strengthening Sharia governance frameworks provides a critical mechanism to optimize overall macro-financial stability. Originality/value: This is the first empirical work to model the structural interaction between deposit insurance safety nets and Islamic corporate frameworks across an entire risk distribution using a quantile approach.

Purpose: The shadow economy represents a critical institutional feature in the Middle East and North Africa (MENA), yet its micro-level impact on banking stability remains underexplored. This study aims to examine the non-linear link between the shadow economy and bank profitability and risk-taking, alongside the moderating role of gross domestic product (GDP) growth. Design/methodology/approach: Using a dynamic panel of 175 banks across 17 MENA countries from 2010 to 2024, we employ a two-step system generalized method of moments (GMM) estimator to address endogeneity, persistence and dynamic panel bias. Findings: Results reveal a robust U-shaped relationship between the shadow economy and bank profitability (return on assets (ROA)/ return on equity), indicating that while initial informality erodes performance, banks adapt beyond a threshold. Risk-taking responses vary by proxy (SDROA vs SDROE), with GDP growth significantly attenuating the adverse effects of informality on both profitability and volatility. Originality/value: This study makes three original contributions to MENA banking literature. It is the first to micro-found the shadow economy's impact on bank-level profitability and risk-taking using a non-linear specification. In addition, it identifies empirically grounded informality thresholds at which the shadow economy transitions from a profitability-reducing to a performance enabler, absent from prior MENA banking studies.

This study investigates the non‐linear impact of the Global Innovation Index (GII) on the performance of banks in the MENA region from 2010 to 2023. Focusing on three key performance metrics—Return on Equity (ROE), Tobin's Q (TQ), and Stock Market Returns no (SR)—the analysis reveals that while innovation initially boosts performance, excessive levels of innovation may lead to diminishing returns, particularly for Tobin's Q and Stock Market Returns. The non‐linear relationship between innovation and ROE shows a U‐shaped pattern, where performance first declines before improving at higher levels of innovation. Further analysis reveals that larger banks and those in high‐GII countries derive stronger benefits from innovation, though these advantages vary across performance measures. Our findings underscore the need for balanced innovation strategies and stable policy environments to maximize bank performance in the MENA region. Policymakers should prioritize reducing uncertainty, while banks must tailor innovation investments to their specific contexts to avoid overexposure to diminishing returns.

Purpose: Growing concern about the environment has raised questions about the effectiveness of research and development in promoting sustainability. This study aims to examine the nonlinear relationship between research and development (R&D) and environmental degradation. In addition, it examines whether natural resource rents moderate the relationship between R&D and environmental degradation. Design/methodology/approach: The study uses panel data from countries in the Association of Southeast Asian Nations (ASEAN) from 2013 to 2022. The ecological footprint and carbon emissions are used to measure environmental degradation. The analysis was conducted using panel quantile regression. Findings: The findings indicate a significant nonlinear (U-shaped) relationship between R&D and environmental degradation. Additionally, natural resource rents weaken the positive effect of R&D on environmental degradation. Originality/value: This study contributes to the body of knowledge on the relationship between R&D and environmental degradation. While previous studies have focused on a linear relationship, this study provides evidence of a nonlinear U-shaped relationship in the ASEAN context.

This study examined how ESG has influenced credit growth across MENA countries/regions and investigated the extent to which bank size and Islamic banking influence this relationship. Using panel data from 42 listed banks across 10 MENA countries (367 bank-year observations from 2010–2023), the analysis employs quantile regression to capture heterogeneous effects across different levels of credit growth. The findings showed that ESG disclosure has a significant positive influence on credit growth across most quantiles, except at the (25th) quantile where the effect was insignificant. Bank size moderated this relationship, it weakens the ESG effect at the (10th) quantile but enhances it at the (25th, 50th, 75th) quantiles. Although the relationship remained positive at the (90th) quantile, the impact slightly declined, suggesting diminishing marginal gains for larger banks. Islamic banks strengthened the ESG disclosure and credit growth relationship at (10th and 25th, 90th) quantiles but weakened it at the median quantiles. Overall, the results demonstrate that the effect of ESG disclosure on credit growth is heterogeneous and highly dependent on bank characteristics, offering meaningful implications for policymakers and banking practitioners in adapting ESG strategies to enhance credit growth across different quantiles.