Open AccessThe Determinants of Bank Profitability
Author(s) -
Olfa Nessibi
Publication year - 2016
Publication title -
international journal of finance and banking studies
Language(s) - English
Resource type - Journals
ISSN - 2147-4486
DOI - 10.20525/ijfbs.v5i1.45
Subject(s) - profitability index , business , monetary economics , interest rate , financial system , capital (architecture) , economics , state owned , finance , market economy , archaeology , history
Using bank level data this paper examines how bank’s specific characteristics and macroeconomic indicators affect the profitability in the Tunisian banking industry over the period 1990–2008. The results indicate that the more profitable banks are those higher amount of capital and lower operating costs. Furthermore, it appears that private banks tend to perform better than state owned ones. Despite the great importance given to the board of directors, it doesn't have a dominant role in the Tunisian commercial banks. Finally, turning to macroeconomic conditions and its impact on banks’ profitability, we find that the real interest rate has a positive effect on bank profitability.