Determinants of bank profitability in Tunisia: does corruption matter?

Abstract

Purpose

In this paper, the author aims to examine the effect of perceived level of corruption on bank profitability.

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 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/value

The novelty of this study consists in the inclusion of the corruption level as a determinant of bank profitability.

Citation

Bougatef, K. (2017), "Determinants of bank profitability in Tunisia: does corruption matter?", Journal of Money Laundering Control, Vol. 20 No. 1, pp. 70-78. https://doi.org/10.1108/JMLC-10-2015-0044