The impact of loan loss provisions on the firm valorisation: the case of the Tunisian banking sector

Chedli Baccouche, Rim Mouelhi and Sana Ben Ghodbane

African Journal of Accounting, Auditing and Finance, 2014, vol. 3, issue 2, 130-142

Abstract: According to national authorities and international institutions, the prospects for growth of the Tunisian economy remain very encouraging. In order to maintain and further sustain this growth, the banking sector remains a major pillar. Taking into account the prominent role it has been playing in the mobilisation of savings, the financing of the economy and the preservation of the major internal and external balances for several years; it has benefitted from a particular attention. Our study addresses the issue of the evaluation of non-productive loans and their provisioning. With a sample of ten universal Tunisian banks which have been studied over a five year period, we concluded that there is no positive correlation between the provisions' discretionary component for bad debts and the banks' cash flow. This component is positively correlated with the market value of the banks. Insufficient provisions affect the market value of the banks and create problems which could affect the Tunisian economy.

Keywords: loan loss provisions; bad debts; banking industry; banks; cash flows; market value; Tunisia; firm valorisation; economic growth; savings mobilisation; financing; internal balances; external balances; non-productive loans; provisioning; longitudinal studies; discretionary components. (search for similar items in EconPapers)
Date: 2014
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.inderscience.com/link.php?id=66112 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ids:ajaafi:v:3:y:2014:i:2:p:130-142

Access Statistics for this article

More articles in African Journal of Accounting, Auditing and Finance from Inderscience Enterprises Ltd
Bibliographic data for series maintained by Sarah Parker ().