Journals A-Z
All Subjects
Free Journals
sciepub.com
International Journal of Business and Risk Management
ISSN (Print): ISSN Pending ISSN (Online): ISSN Pending Website: https://www.sciepub.com/journal/ijbrm Editor-in-chief: Abdelkader Derbali
Open Access
Journal Browser
Go
Issue 1, Volume 1
Article Metrics
  • 14154
    Views
  • 13047
    Saves
  • 0
    Citations
  • 2
    Likes
Export Article
International Journal of Business and Risk Management. 2018, 1(1), 17-27
DOI: 10.12691/ijbrm-1-1-3
Open AccessArticle

Determinants of Tunisian Banks Profitability

Lamia Jamel1, and Sihem Mansour2

1Faculty of Economic Sciences and Management of Sousse, Department of Economics, Sousse University, Tunisia

2Higher Institute of Management of Sousse, Department of Finance, University of Sousse, Tunisia

Pub. Date: April 18, 2018
View Full Text Full Text PDF Full Text ePUB

Cite this paper:
Lamia Jamel and Sihem Mansour. Determinants of Tunisian Banks Profitability. International Journal of Business and Risk Management. 2018; 1(1):17-27. doi: 10.12691/ijbrm-1-1-3

Abstract

The purpose of the paper is to examine empirically the performance indicators of Tunisian banks. We use Net Interest Margin (NIM) and the Return on Assets (ROA) as profitability measures to determine the affect of bank-specific characteristics, regulatory policies, macroeconomic indicators, financial development indicators, and bank concentration and density, institutional constraints to competition and crisis on banking performance. We employ the generalized least squares (GLS) to estimate the panel model who measure the bank profitability. Thus, the profitability seems to have been positively influenced by the size, composition of assets, credit risk, concentration, market capitalization and the crisis if the profitability is measured by net interest margin (NIM) and Return On Assets (ROA).

Keywords:
Return On Assets Net Interest Margin bank profitability financial crisis generalized least squares panel estimator

Creative CommonsThis work is licensed under a Creative Commons Attribution 4.0 International License. To view a copy of this license, visit http://creativecommons.org/licenses/by/4.0/

References:

[1]  Zhang, YC, and Li, S.L. (2009). gh performance work practices and firm performance: Evidence from the pharmaceutical industry in China. The International Journal of Human Resource Management 20(11), 2331-2348.
 
[2]  Olson, D., Zoubi, T.A. (2011). Efficiency and bank profitability in MENA countries. Emerging Markets Review, 12, 94-110.
 
[3]  Ben Naceur, S., Omran, M. (2011). The effects of bank regulations, competition, and financial reforms on banks performance. Emerging Markets Review, 12, 1-20.
 
[4]  Chandler, Alfred D. (1992). "Organizational Capabilities and the Economic History of the Industrial Enterprise."Journal of Economic Perspectives, 6 (3): 79-100.
 
[5]  Akhavein, J.D., Berger, A.N., and Humphrey, D.B. (1997). Effects of bank megamergers on efficiency and prices: Evidence from the profit function. Review of Industrial Organization, 12, 95-139
 
[6]  Demirgüç-Kunt, Asli and Vojislav Maksimovic, (1998), Law, Finance, and Firm Growth, Journal of Finance 53, 2107-2137.
 
[7]  Demirguc-Kunt, A., and Huizinga, H. (1999). Determinants of commercial bank interest margins and profitability: some international evidence (English). The World Bank economic review. 13(2), 379-408.
 
[8]  Bikker, J.A., and Hu, H. (2002), Cyclical patterns in profits, provisioning and lending of banks procyclicality of the new Basel capital requirements. BNL Quarterly Review, 221, 143-175.
 
[9]  Zingales, L. (1998). Survival of the Fittest or the Fattest? Exit and Financing in the Trucking Industry. The Journal of Finance, 8(3), 905-938.
 
[10]  McDonald, J. (1999). The Determinants of Firm Profitability in Australian Manufacturing. The Economic Record, 75(229), 115-26.
 
[11]  Ahmed, A.M., and Khababa, N. (1999). Performance of Banking Sector in Saudi Arabia. Journal of Financial Management & Analysis, 12(2), 30.
 
[12]  Todani, K. (2001). Pricing Behavior in the U.S. Railroad Industry: Lessons for South Africa.
 
[13]  Kambhampati, U. and Parikh. A. (2003). Disciplining Firms: The Impact of Trade Reforms on Profit Margins in Indian Industry. Applied Economics, 35, 461-470.
 
[14]  Grimes, G. and Barkan. P. (2006). Cost-Effectiveness of Railway Infrastructure Renewal Maintenance. Journal of Transportation Engineering © ASCE, 132(8), 601-608.
 
[15]  Abor, J. (2008). Determinants of the Capital Structure of Ghanaian Firms. AERC Research Paper 176, African Economic Research Consortium, Nairobi, Kenya, March 2008.
 
[16]  Lim, S. and Lovell. K. (2009). Profit and Productivity of U.S. Class I Railroads.” Managerial and Decision Economics 30, 423-442.
 
[17]  Sealey, C.W. and Lindley, J.T. (1977). Inputs, Outputs, and Theory of Production Cost at Depository Financial Institutions, Journal of Finance, 32, 1251-1266.
 
[18]  Aigner, D., Lovell, C.A.K. and Schmidt, P. (1977). Formulation and Estimation of Stochastic Frontier Production Function Models, Journal of Econometrics, 6, 21-37.
 
[19]  Short, B. (1979), The relation between commercial bank profit rates and banking concentration in Canada, Western Europe and Japan. Journal of Banking and Finance, 3(3), 209-219.
 
[20]  Bourke, P. (1989), Concentration and other determinants of bank profitability in Europe, North America and Australia. Journal of Banking and Finance, 13(1), 65-79.
 
[21]  Molyneux, P., and Thornton, J. (1992), The determinants of European Bank profitability. Journal of Banking and Finance, 16, 1173-1178.
 
[22]  Abreu, M., and Mendes, V., (2002), Commercial Bank Interest Margins and Profitability: evidence from E.U. Countries. Working Paper Series, Porto.
 
[23]  Staikouras, C., and Wood, G. (2004). The determinants of European bank profitability. International Business and Economics Research Journal, 3(6), 57-68.
 
[24]  Goddard, J., Molyneux, P., and Wilson, J., (2004), The profitability of European banks: a cross-sectional and dynamic panel analysis. Manchester School, 72(3), 363-381.
 
[25]  Athanasoglou, P., Delis, M., and Staikouras, C. (2006), Determinants of bank profitability in the southern eastern European region. Bank of Greece Working Paper No. 47.
 
[26]  Micco, A., Panizza, U., and Yanez, M. (2007), Bank ownership and performance. Does politics matter? Journal of Banking and Finance, 31(1), 219-241.
 
[27]  Pasiouras, F., Kosmidou, K. (2007). Factors influencing the profitability of domestic and foreign commercial banks in the European Union. Research in International Business and Finance, 21, 222-237.
 
[28]  Berger, A., Hanweck, D., and Humphrey, D., (1987), Competitive viability in banking: scale, scope, and product mix economies. Journal of Monetary Economics, 20(3), 501-520.
 
[29]  Berger, A.N. (1995), The profit-structure relationship in banking. Test of market power and efficient-structure hypotheses. Journal of Money, Credit and Banking, 27, 404-431.
 
[30]  Mamatzakis, E., and Remoundos, P., (2003), Determinants of Greek commercial banks profitability, 1989-2000. Spoudai, 53(1), 84-94.
 
[31]  Athanasoglou, P., Brissimis, S., and Delis, M. (2008), Bank-specific, industry specific and macroeconomic determinants of bank profitability. Journal of International Financial Markets, Institutions and Money, 18(2), 121-136.
 
[32]  Afanasieff, T., Lhacer, P., and Nakane, M., (2002), The determinants of bank interest spreads in Brazil, Working Paper. Banco Central di Brazil.
 
[33]  Ben Naceur, S., and Goaied, M. (2001), The determinants of the Tunisian deposit banks’performance. Applied Financial Economics, 11(3), 317-319.
 
[34]  Ben Naceur, S., and Goaied, M., 2008. The determinants of commercial bank interest margin and profitability: evidence from Tunisia. Frontiers in Finance and Economics 5, 106-130.
 
[35]  Bonin, J. P., Hassan, I., and Wachtel, P. (2005). Bank performance, efficiency and ownership in transition countries. Journal of Banking and Finance, 29, 31-53.
 
[36]  Hassan, M.K., and Bashir, A.H.M., (2003). Determinants of Islamic Banking Profitability. Paper Presented at the 10th ERF Annual Conference.
 
[37]  Valverde, S. C., and Ferna´ndez, F. R. (2007). The determinants of bank margins. Journal of Banking & Finance, 31, 2043–2063.
 
[38]  Poghosyan, T., 2010. Re-examining the impact of foreign bank participation on interest margins in emerging markets. Emerging Markets Review, 11, 390-402.
 
[39]  Pilloff, S. J., and Rhoades, S. A. (2002). Structure and Profitability in Banking Markets. Review of Industrial Organization, 20, 81-98.
 
[40]  Ramlall, I. (2009). Bank-Specific, Industry-Specific and Macroeconomic Determinants of Profitability in Taiwanese Banking System: Under Panel Data Estimation. International Research Journal of Finance and Economics (34), 160-167.
 
[41]  Kosmidou, K. (2008). The determinants of banks’profits in Greece during the period of EU financial integration. Managerial Finance, 34 (3), 146-159.
 
[42]  Sufian, F. (2009). Determinants of bank efficiency during unstable macroeconomic environment: Empirical evidence from Malaysia. Research in International Business and Finance, 23, 54-77.
 
[43]  Spathis, C., Koasmidou, K., and Doumpos, M. (2002). Assessing Profitability Factors in the Greek Banking System: Amulticriteria methodology. International Transactions in Operational Research, 517-530
 
[44]  Sayilgan, G., and Yildirim, O. (2009). Determinants of Profitability in Turkish Banking Sector: 2002-2007. International Research Journal of Finance and Economics (28), 207-214.
 
[45]  Ben Naceur, S., and Goaied, M. (2002). The relationship between dividend policy,financial structure, profitability and firm value. Applied Financial Economics, 12, 843-849.
 
[46]  Sufian, F., Habibullah, M.S. (2009). Bank Specific and Macroeconomic Determinants of Bank Profitability: Empirical Evidence from the China Banking Sector. Frontiers of Economics in China, 4 (2), 274-291.
 
[47]  Kunt, A. D., and Detragiache, E. (1998). The Determinents of Banking Crises in Developing and Developed Countries. International Monetary Fund (IMP Staff Papers), 45 (1), 81-109.
 
[48]  Alexiou, C. and Sofoklis, V. (2009). Determinants of bank profitability: Evidence from the Greek banking sector. In: Ekonomski anali, 54(182), 93-118.
 
[49]  Badreldin, A.M., (2009). Measuring the Performance of Islamic Banks by Adapting Conventional Ratios (October 21, 2009). German University in Cairo Working Paper No. 16.
 
[50]  Kosmidou, K., Pasiouras, F., Doumpos, M., and Zopounidis, C., 2004. Foreign versus domestic banks’ performance in the UK: a multicriteria approach. Computational Management Science 1, 329–343.
 
[51]  Dietrich, A., Wanzenried, G. (2011). Determinants of bank profitability before and during the crisis: Evidence from Switzerland. Journal of International Financial Markets, Institutions & Money, 21 (3), 307-327.
 
[52]  Ali, K., Akhtar, M.F., Ahmed, H.Z. (2011). Bank-Specific and Macroeconomic Indicators of Profitability - Empirical Evidence from the Commercial Banks of Pakistan. International Journal of Business and Social Science, 2 (6), 235-242.
 
[53]  Bianco M., Jappelli T., and Pagano M. 2001. “Courts and Banks: Effects of Judicial Enforcement on Credit Markets,” CSEF Working Papers 58, Centre for Studies in Economics and Finance (CSEF), University of Salerno.
 
[54]  Revell, J. (1979). Inflation and financial institutions. Financial Times, London.
 
[55]  Perry, P. (1992). Do banks gain or lose from inflation. Journal of Retail Banking, 14(2), 25-30.
 
[56]  Ben Naceur, S., and Kandil, M. (2009), The impact of capital requirements on banks ‘cost of intermediation and performance: case of Egypt. Journal of Economics and Business, 61, 70-89.
 
Manuscript template