Saliha Theiri, Jamel Boukhatem
Purpose This study aims to investigate the impact of fintech development on banking stability in selected Middle East and North Africa (MENA) countries. It assesses whether fintech adoption enhances financial resilience through innovation and improved financial inclusion, or whether it introduces additional sources of risk within the banking sector. Design/methodology/approach The analysis is based on a balanced panel data set of 67 commercial banks over the period 2011–2023. Fintech development is proxied by three indicators: regulatory sandboxes, fintech companies (FTC) and fintech transactions (FTT), while banking stability is measured using the LZ-score. The empirical framework combines static and dynamic panel models to account for persistence and potential endogeneity. The results are further supported by a series of robustness checks, reinforcing the reliability and validity of the findings. Findings The results indicate that fintech development is positively associated with banking stability across the full sample. In particular, the presence of FTC significantly enhances operational efficiency and service diversification, thereby strengthening financial resilience. However, the positive effect of FTT is more pronounced in high-income countries, reflecting the role of advanced financial and digital infrastructures in amplifying the benefits of fintech adoption. Originality/value This study provides new empirical evidence on the fintech-stability nexus in the MENA region. By highlighting the conditional nature of this relationship across different institutional contexts, it contributes to the literature on financial intermediation and digital transformation. The findings also offer policy-relevant insights for regulators seeking to promote innovation while preserving financial stability.