Banking governance and digital transformation: Moderating effects on financial stability in the Algerian banking sector
Banking governance and digital transformation: Moderating effects on financial stability in the Algerian banking sector

Summary/Abstract: This study examines the impact of digital transformation on financial stability in the Algerian banking sector, with a particular focus on the moderating role of corporate governance. Using a panel dataset of Algerian commercial banks covering the period 2018–2024, the study applies the dynamic System GMM estimator to address endogeneity concerns and generate robust estimates of the effects on financial stability, measured by the Z-score and non-performing loan (NPL) ratio. The findings indicate that digital transformation significantly enhances financial stability; however, its positive effects depend heavily on the quality of corporate governance. In this relationship, corporate governance plays a critical moderating role. Nevertheless, infrastructure deficiencies and the digital divide remain important external constraints at the national level. Therefore, successful banking modernization in Algeria requires aligning digital innovation with strong governance mechanisms and more advanced supervisory technologies (Sup Tech).

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