Does financial technology matter in the relationship between CSR and banks' financial stability? a quantile regression approach.

Abstract

In today's rapidly evolving global financial landscape, the growing importance of corporate social responsibility (CSR) and Fintech demands immediate attention, making it a vital and urgent area for exploration. This study examines whether Fintech plays a moderating role in the relationship between CSR and the financial stability of banks operating in some countries in the MENAT region from 2010 to 2021. Using simultaneous quantile regression analysis, the results show that Fintech positively moderates the effect of CSR on banks' financial stability at the medium and highest financial stability quantiles. This outcome highlights the need for banking institutions to embrace new technologies and responsible practices to bolster their financial stability in the changing financial landscape. Furthermore, Fintech positively moderates the impact of banks' financial stability on CSR across all quantiles. Thus, Fintech adoption helps banks to be more socially responsible regardless of their stability level. To ensure the robustness of our results, we employ the generalized panel method of moments (GMM) and quantile regression method to test whether the relationship between CSR and banks' financial stability varies with the presence of Fintech. The findings reveal that CSR enhances financial stability in the middle and higher Fintech quantiles. Therefore, Fintech adoption can potentially amplify the benefits derived from CSR activities, leading to greater bank stability. In addition, financial stability increases banks' involvement in socially responsible initiatives across all Fintech levels. This study provides policymakers with meaningful insights into the importance of embracing simultaneously technological innovation and socially responsible practices to enhance financial stability and achieve sustainable development goals.