ANALYSIS OF INTERNAL AND EXTERNAL FACTORS INFLUENCING COMMERCIAL BANKS PERFORMANCE: EMPIRICAL EVIDENCE FROM TUNISIA BANKING SECTOR (original) (raw)

Determinants of Tunisian Bank Profitability

The aim of this study is to examine the persistence of profit and the effect of bank-specific determinants of Tunisian bank profitability. To account for profit persistence, we apply a dynamic panel model, using Generalized Methods of Moments (GMM) system for 16 Tunisian commercial banks, divided into 11 deposit banks and 5 development banks during the period 1999-2010. The estimates show that the evidence for profit persistence is positive and significant for both deposit and development banks during the period 2005-2010. However, we find that deposit banks are more competitive than development banks. Therefore, abnormal profit persists for Tunisian banks, but development banks enjoy more regulatory protection than deposit banks. We find a positive relationship between capital and profitability. This implies that the capital market is not perfect in the Tunisian banking sector. The liquidity risk management by Tunisian banks shows that the overuse of deposits to finance loans is li...

Profitability determinants in the Tunisian Banks

International journal of business and social research, 2013

The present work has as objectives to both investigate the different variables of profitability of the Tunisian banks and to analyze the mechanisms through which the banks features and specificities may influence it. For this purpose, a sample panel consisting of 10 Tunisian banks was used over the period ranging from 1999 to 2010. The banks selected are those which provided the necessary data all along the period of research. The generalized method of moments (GMM) was used to generate the results of the econometric estimation data of the dynamic panel. These results indicate that many institutional and structural factors significantly influence the Tunisian banks profitability.

Explanatory Factors of Bank Performance Evidence from Tunisia

2013

Using the GMM estimator technique described by Blundell and Bond (1998), this paper tend to identify factors explaining Tunisian bank performance. Retaining the main 10 commercial Tunisian banks during the 1998 to 2011 period, we examine whether, for banks operating in similar macroeconomic and financial development environments, one can make judgments concerning the success of their competitive strategies and other managerial procedure by using different profitability measures. Our investigation includes bank-specific as well as industry-specific and macroeconomic factors affecting bank performance. The empirical results reveal a high degree of persistence of bank performance. By the other hand, our findings suggest that the bank capitalization, as well as the best managerial efficiency, have a positive and significant effect on the bank performance. Private owned banks seem to be more profitable than state owned ones. That's why, privatizing state-owned Tunisian banks is recommended in order to improve their performance. Industry-specific factors, as the concentration and that of the system bank size have a negative and a significant effect on performance. As for the impact of the macroeconomic indicators, we conclude overall that the variables do not have a significant effect on bank performance. However Inflation seems to affect negatively bank's net interest margin.

What Determines the Profitability of Banks During and before the International Financial Crisis? Evidence from Tunisia

2013

The current international financial crisis has highlighted that a well-functioning financial system is significantly important for economic growth. The aim of this study is to specify an empirical framework to investigate the impact of bank-specific, industry-specific and macroeconomic determinants on the profitability, before (2000-2006) and during (2007-2010) the international financial crisis, in the large Tunisian commercial banks. The measures of profitability that have been used in the study are the return on equity (ROE), return on assets (ROA) and net interest margin (NIM). We adopt the dynamic panel approach to correct for these potential problems by using the generalized method of moments in system (GMM in system). Our empirical study allowed us to conclude that the Tunisian banking sector was slightly exposed to the effects of the international financial crisis because of its low integration in international financial markets.

The Determinants of Bank Performance: The Case of Tunisian Listed Banks

This paper studies the relationship between Tunisian listed banks performance and two types of determinants; internal and external. The internal explanatory variables are: (1) the bank size, (2) privatization, (3) board size, (4) capital-to-assets ratio, and (5) cost of efficiency. The macroeconomic (external) exogenous variables are: (1) gross domestic product growth rate and (2) inflation. Our panel-data analyses suggest a statistically significant and negative relationship between bank profitability (endogenous variable) and board size. However, the remaining variables were found to be statistically insignificant. This can be explained by two main sub-hypotheses: (a) state-owned banks included in the sample disturb the statistical significance of the results and (b) the year 2011 is a cutoff point that changed the Tunisian bank performance determinants.

Profitability of Public and Private Commercial Banks in Algeria: Panel data analysis during 1997-2012

The Algerian banking system has experienced since the early 90s a series of metamorphoses, characterizing different stages of reform and compliance with international standards. The question remains about the performance of commercial banks in Algeria. In this study we examine the relationship between profitability of commercial banks and two types of factors internal and external, for a sample of 10 public and private Algerian banks over 1997-2012. We use the regression model with unbalanced panel data analysis and CAMEL approach, but this study used four internal indicators: capital adequacy, assets quality, management efficiency and liquidity at used proxies for performance of banks and only two external indicators GDP and inflation rate. After regression analysis of unbalanced panel with three methods POLS, fixed effects and random effects we conclude that the capital adequacy, management efficiency and liquidity indicators are significant effect profitability of commercial banks in Algeria in the period of study. The management efficiency and liquidity indicators are positively related with profitability, and the capital indicator is negatively related with profitability. The assets quality, GDP and inflation have not any significant effect on profitability of commercial banks in Algeria in the period of study. The Acceptance of fixed effects model shows that the relationship varies from one bank to another, due to the different characteristics of each bank.

Comparison of Bank Profitability: Evidence from Morocco and Tunisia

International journal of smart business and technology, 2022

The banking sector in African countries is attracting more interest among practitioners and researchers. In this paper, we compare the profitability of banks in Morocco and Tunisia, in which authorities are making great efforts to improve the financial sector using different tools. Our study is an attempt to compare the financial systems of both nations. Using panel data analysis, we have studied the banking profitability in both countries from 2009 to 2018. This paper presents a quantitative study using the Generalized Least Squares (GLS) regression method with the software "STATA". Two models with fixed and random effects were studied. A Hausman test was performed to account for potential endogeneity in the collected data. The obtained results show that Tunisian and Moroccan banks operate efficiently. Hence, the capital adequacy ratio is directly related to banking profitability for Tunisian and Moroccan banks. In terms of the ratio of net interest revenue to total assets, Tunisian banks have the best results.

Determinants of Bank Profitability: Evidence from Syria

Journal of Applied Finance and Banking, 2014

This study investigates the determinants of bank profitability in the Syrian banking sector. It seeks to identify significant bank-specific, industry-specific, and macroeconomic determinants of bank profitability in Syria. We utilize the Generalized Method of Moments (GMM) technique on unbalanced panel data set the covers the period from 2004 until 2011. The empirical results reveal that profitability persists to a moderate extent. All bank-specific determinants (liquidity risk, credit risk, bank size, and management efficiency) with the exception of bank capital, affect bank profitability significantly. However, no evidence was found in support of the Structure Conduct Performance (SCP) hypothesis, since the concentration ratio found to have no impact on bank profitability. Finally, the study shows that macroeconomic variables (inflation rate and real gross domestic product growth rate) affect bank profitability significantly.

The Tunisian Banks Performance

2018

This paper explores the different factors that lie behind the performance of the Tunisian banks. In fact, this research co versa sample of ten Tunisian banks over the period that ranges from the year 2006 to 2015. The profitability of these banks is measured by conducting an analysis of panel data using two different but complementary indicators, namely Return on Assets (ROA) and Net Interest Margins (NIM). They include both organizational and macroeconomic variables as well macro-financial ones. Results indicate that the bank operating expenses have a positive and significant impact on the interest margins but negatively affect the ROA in our sample. Equity, as a second organizational variable, has a positive effect on both NIM and ROA. The concentration movement, as a macro-financial variable, supports the ROA (profitability) but degrades the NIM. The inflation rate is positively and significantly affected by the net interest margin.