The Factors Determining the Profitability of Tunisian Banks

The Factors Determining the Profitability of Tunisian Banks

Abdelkader Mohamed Sghaier Derbali
Copyright: © 2024 |Pages: 24
DOI: 10.4018/979-8-3693-0532-4.ch009
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Abstract

The main objective of this chapter is to study empirically the performance indicators of Tunisian banks during the period from 1999 to 2020. The authors use NIM and ROA as profitability measures. They employ GLS method to estimate the panel model who measure the bank profitability. From the empirical findings, the authors find that EQUITY has a positive impact on the profitability of banks. The credit risk presents a negative impact on performance. The size of the banks affects their performance positively. The financial regulations and the financial reform are statistically significant and positive. The density is statistically significant and negative. In that case, the level of the collected deposits has a negative impact on the profitability of Tunisian banks. Private credit is statistically significant and positive. The improved performance by Tunisian banks largely reflects the prudential supervision exercised by the Central Bank of Tunisia.
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2. Literature Review

Several studies have examined various industries, commodities and products using profitability measures and multiple regression methods. The studies by Molyneux and Thornton (1992), Demirguc-Kunt and Huizinga (1999) and Pasiouras and Kosmidou (2007) investigate a panel data set. The empirical results obtained by many authors (Ben Naceur, 2003; Ben Naceur and Omran, 2011) can demonstrate that bank-specific characteristics bank size and credit risk have a positive and significant impact on the net interest margin and the efficiency. Thus, for the impact of macro-economic and financial indicators in the performance of banks, Ben Naceur and Omran (2011) conclude that these variables have a significant impact on the net interest margin for the variation inflation. However, inflation shocks appear to be mostly gone by the rates creditors.

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