Determinants of bank profitability in Tunisia: does corruption matter?

Determinants of bank profitability in Tunisia: does corruption matter? PurposeIn this paper, the author aims to examine the effect of perceived level of corruption on bank profitability.Design/methodology/approachThe 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).FindingsThe author finds a positive relationship between the bank profitability 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 findings reveal that bank profitability is positively related to capitalization level and liquidity. By contrast, a low asset quality is associated with low profitability.Originality/valueThe novelty of this study consists in the inclusion of the corruption level as a determinant of bank profitability. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Money Laundering Control Emerald Publishing

Determinants of bank profitability in Tunisia: does corruption matter?

Journal of Money Laundering Control, Volume 20 (1): 9 – Jan 3, 2017

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
1368-5201
DOI
10.1108/JMLC-10-2015-0044
Publisher site
See Article on Publisher Site

Abstract

PurposeIn this paper, the author aims to examine the effect of perceived level of corruption on bank profitability.Design/methodology/approachThe 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).FindingsThe author finds a positive relationship between the bank profitability 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 findings reveal that bank profitability is positively related to capitalization level and liquidity. By contrast, a low asset quality is associated with low profitability.Originality/valueThe novelty of this study consists in the inclusion of the corruption level as a determinant of bank profitability.

Journal

Journal of Money Laundering ControlEmerald Publishing

Published: Jan 3, 2017

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