Using panel data spanning 2004–2023 of 21 countries in the MENA (Middle East and North Africa) region, we measure systemic risk and assess its influence on key banking sector performance indicators, including financial stability (proxied by commercial bank branches per 100,000 adults), providing evidence from the emerging market context. One of the key findings of the study is the pivotal role played by financial access in promoting banking stability. In particular, the density and outreach of commercial banking branches were shown to have a stabilizing effect on the banking system. Also, findings reveal that systemic risk significantly undermines bank stability and operational efficiency while constraining financial depth. The study contributes to the literature by offering empirical evidence on the adverse effects of systemic risk in a region characterized by financial volatility and structural vulnerabilities. These findings align with existing global evidence that links financial development with reduced systemic risk, yet they also offer new empirical insights that are contextually relevant to the MENA region. The findings provide actionable recommendations for policymakers. Regulatory authorities in the MENA region should consider strategies that not only enhance the robustness of financial institutions but also promote inclusive access to banking services. The dual focus on institutional soundness and outreach could serve as a cornerstone for sustainable financial stability. Tailored policies that encourage branch expansion in underserved areas, coupled with incentives for inclusive banking practices, may yield long-term benefits by reducing the concentration of risk and improving the responsiveness of the financial system to external shocks.

Stock market efficiency plays a vital role in financial economics, as it reflects how quickly and accurately asset prices incorporate available information. This study investigates stock market efficiency and banking sector stability in the MENA region, focusing on the dynamic interactions between macroeconomic indicators, financial depth, and bank-specific variables. Using panel data from 21 countries over the period 2003–2021, the analysis employs both fixed-effects regression and a Panel Vector Autoregression (PVAR) framework to capture cross-country heterogeneity, temporal dynamics, and systemic interdependencies. The findings reveal that traditional macroeconomic variables, including inflation, GDP per capita, and domestic credit to the private sector, exert limited direct influence on banking sector stability as measured by the Z-score. Instead, the results highlight the importance of country-specific characteristics, institutional quality, and regulatory frameworks in shaping financial resilience across MENA countries. Overall, the findings confirm that effective risk management plays a central role in strengthening bank stability. By enhancing financial resilience, improving operational discipline, and reducing vulnerability to economic and financial shocks, sound risk management practices support the ability of banks to maintain consistent performance over time. The results further suggest that stability is not solely driven by internal mechanisms but also depends on the broader economic and institutional environment in which banks operate. Together, these elements reinforce the capacity of banking systems to contribute to long-term financial stability in the region.

This study explores how adjustments in risk management can influence the future financial performance of 20 countries in the MENA (Middle East and North Africa) region. While the existing literature has explored risk factors in emerging economies, this research provides novel empirical evidence on how risk management practices influence long-term financial stability and growth, a dimension underexplored in the MENA context. Using a Panel Vector Autoregression (PVAR) model, we analyze data from 2005 to 2021 to quantify the dynamic relationship between risk mitigation strategies and key financial outcomes, accounting for regional volatility and cross-country heterogeneity. This methodology allows for the examination of the impact of risk management on future financial outcomes, considering both current uncertainties and strategic approaches to mitigating risks. The results reveal that robust forward-looking risk management practices significantly impact the future financial performance and resilience of the countries in the MENA region. Our findings highlight that a well-designed risk management strategy is crucial for averting financial crises and supporting long-term economic growth and sustainability of nations. This study contributes to the understanding of how strategic risk management can drive future economic and financial stability in the MENA region, providing unique insights into the role of forward-thinking risk practices in shaping national success.