Private sector financing: linear and quadratic effects of domestic public debt on bank credit supply

Sana Zouari (), Dhafer Saidane () and Foued Badr Gabsi ()
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Sana Zouari: University Côte d'Azur, INSTAR, France - University of Sfax, LED, Tunisia
Dhafer Saidane: SKEMA Business School - University Côte d'Azur, France
Foued Badr Gabsi: Faculty of Economics and Management of Sfax, University of Sfax, Tunisia

Economics Bulletin, 2022, vol. 42, issue 2, 372 - 387

Abstract: This paper investigates the impact of domestic public debt on credit supply to the private sector using a panel of 19 banks operating in the Arab Maghreb region over the period 2005-2018. The results confirm the existence of both linear and quadratic effects of domestic public debt on credit supply to the private sector. The estimated threshold found to be around 9.77 % of total assets. The regression results are robust across two alternative specifications excluding public banks and taking into consideration the impact of the Arab Spring on credit supply to the private sector for different levels of domestic public debt.

Keywords: Credit supply; Domestic public debt; Threshold; Non-linear dynamic panel (search for similar items in EconPapers)
JEL-codes: E5 E6 (search for similar items in EconPapers)
Date: 2022-06-30
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