Determinants of bank profitability in Tunisia: does corruption matter?
| DOI | https://doi.org/10.1108/JMLC-10-2015-0044 |
| Pages | 70-78 |
| Published date | 03 January 2017 |
| Date | 03 January 2017 |
| Author | Khemaies Bougatef |
| Subject Matter | Accounting & Finance,Financial risk/company failure,Financial compliance/regulation,Financial crime |
Determinants of bank
protability in Tunisia: does
corruption matter?
Khemaies Bougatef
Higher Institute of Computer Science and Management of Kairouan,
University of Kairouan, Kairouan, Tunisia
Abstract
Purpose –In this paper, the author aims to examine the effect of perceived level of corruption on bank
protability.
Design/methodology/approach –The analysis is based on a balanced panel of ten commercial banks in
Tunisia over the period 2003-2014. The author uses the generalized method of moments estimator technique
described by Arellano and Bover (1995).
Findings –The author nds a positive relationship between the bank protability and the corruption
level. This surprising result suggests that Tunisian commercial banks take advantage from the high level
of corruption. Regarding the others determinants, the ndings reveal that bank protability is positively
related to capitalization level and liquidity. By contrast, a low asset quality is associated with low
protability.
Originality/value –The novelty of this study consists in the inclusion of the corruption level as a
determinant of bank protability.
Keywords Commercial banks, Bank protability, Corruption, Dynamic panel data
Paper type Research paper
1. Introduction
Corruption becomes one of the biggest problems and a topic of great interest for researchers
and practitioners. Corruption is blamed for its negative impact on economic growth (Mauro,
1995). For this reason, ghting against corruption at all levels in Tunisia has become a
priority after the Jasmin Revolution of January 2011. In this sense, the Tunisian transition
government has established the National Commission of Investigation of Cases of
Corruption and Embezzlement. This commission has been consolidated later by the creation
of the Ministry of Governance and Fighting Corruption. However, Tunisia fell from the 59th
place in 2010 to the 79th at the end of 2014, according to Transparency International’s
reports. This widely spread of corruption can lower economic development in Tunisia
through several channels such as lower investment (Mauro, 1995) and deterioration of banks’
asset quality (Park, 2012).
The present paper aims to investigate the impact of corruption on the protability of
Tunisian banks. The novelty of this study consists in the inclusion of the corruption
level as a determinant of bank protability. The analysis of this topic seems very
interesting given the primordial role that can be played by the banking sector in
stimulating economic development in Tunisia. Thus, the creation of favorable
JEL classication – G21, C33
The current issue and full text archive of this journal is available on Emerald Insight at:
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JMLC
20,1
70
Journalof Money Laundering
Control
Vol.20 No. 1, 2017
pp.70-78
©Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-10-2015-0044
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