Efficiency and Market Power in Tunisian Banking

Abderazak Bakhouche (), Anissa Naouar (), Mohamed Lotfi Boulkeroua (), Randa Elchaar (), Anca Bocanet () and Eman Zabalawi ()
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Abderazak Bakhouche: Higher Colleges of Technology
Anissa Naouar: MENA College of Management
Mohamed Lotfi Boulkeroua: Higher Colleges of Technology
Randa Elchaar: Higher Colleges of Technology
Anca Bocanet: Higher Colleges of Technology
Eman Zabalawi: Amity Group

A chapter in Contemporary Research in Accounting and Finance, 2022, pp 1-44 from Springer

Abstract: Abstract In the last three decades, the banking structure in Tunisia has witnessed a consistent weakening in concentration, expansion of foreign capital, shrinking of state ownership and the entry of new Islamic banks. These developments may suggest that the prevailing competitive conditions have improved and that banks have relinquished the features of the quiet life. This study explores the relationship between bank cost and profit efficiency levels and market power in Tunisia by testing the Hicks’ quiet life hypothesis. The results reject the quiet life hypothesis but cannot reject the relative market power hypothesis in Tunisian banking. Nevertheless, the findings show that the market power-efficiency relationship is sensitive to ownership types. Strong evidence emerges supporting the quiet life hypothesis for the banques publiques and generally domestically owned banks, whereas it is rejected for foreign banks. These findings may be presented as an argument supporting the privatisation of state banks, preferably for the benefit of foreign capital.

Keywords: Tunisia; Efficiency; Market power; Lerner Index; Quiet Life Hypothesis (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-981-16-8267-4_1

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DOI: 10.1007/978-981-16-8267-4_1

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