Impact of Political Uncertainty on Banking Productivity: Investigating the Jasmin Revolution Effect on the Tunisian Banking System

Mohamed El Fodil Ihaddaden ()
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Mohamed El Fodil Ihaddaden: National Higher School of Statistics and Applied Economics ENSSEA

Economics Bulletin, 2020, vol. 40, issue 1, 437-447

Abstract: Following the Arab Spring, many researchers investigated the impact of political uncertainty on the financial system. Nonetheless, they mostly focused on the stock market, neglecting the banking sector which may be the core structure of financing. Our study seeks to strengthen the literature on the relationship between political instability and banking performance by investigating the impact of the Jasmin revolution on the Tunisian banking industry's productivity. To that aim, we employ the DEA-based Malmquist Productivity Index on the 18 most important commercial banks in Tunisia over the period 2007-2017 which includes an ante and a post revolution era. Our results indicate that the Tunisian revolution has a lasting negative impact. Furthermore, we observe that political transition did not succeed in achieving productivity recovery. Finally, mixed banks are particularly affected by the political turbulence induced by the revolution.

Keywords: Productivity analysis; political uncertainty; Data Envelopment Analysis; Malmquist Productivity Index. (search for similar items in EconPapers)
JEL-codes: D8 L2 (search for similar items in EconPapers)
Date: 2020-02-07
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