High-Risk Appetite of Banks and Central Bank Bailouts: Tunisian Experience

Zouari Dorra, Kriaa Farouk and Sonia Ghorbel-Zouari

The IUP Journal of Bank Management, 2014, vol. XIII, issue 2, 7-32

Abstract: This paper investigates the effects of bank liquidity needs on the monetary authority’s reaction. Over the period stretching between January 1990 and December 2010, we find that the liquidity resources are unsteady and insufficient, whereas liabilities are higher and unsteady. Based on ordinary least square regression and lagged operator technique, we study the efficiencies of the Tunisian central bank interventions. It is found that in Tunisia, the bank liquidity need is in some way neglected by monetary authorities, although it has a short-term and steady effect on the central bank reaction. It is recommended that the central bank distinguish between banks’ bailout strategy and monetary policy so that the banks focus on liquidity gap resources.

Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:icf:icfjbm:v:13:y:2014:i:2:p:7-32

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