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Financial Crises and Banking Deregulation: the Case of Tunisia

Author

Listed:
  • Ben m'barek Hassene

    (ESSEC Business school Tunisia)

  • Ben romdhane Hager

    (university of Tunisia)

Abstract

The aim of this paper is to determine banking deregulation level as a function of the variations of the internal and external fundamentals of the economy. Variations of these variables constitute an indicator of the internal and external vulnerability of the Tunisian economy. At a particular level, this vulnerability may indicate the start or the reinforcement of a financial crisis. Following this line of thinking, we propose a serial/ordered multinomial logit model that links qualitative deregulation variables to variations of several economic variables. The main results show that starting from a particular critical threshold the variations of these internal and external fundamentals indicate a triggering of a financial crisis and subsequently induce a significant intervention from the part of monetary authorities through tightening the level of control and then through a severe deregulation. However, if these variations do not exceed the confidence level, this leads the central bank to follow a progressive deregulation process.

Suggested Citation

  • Ben m'barek Hassene & Ben romdhane Hager, 2010. "Financial Crises and Banking Deregulation: the Case of Tunisia," Economics Bulletin, AccessEcon, vol. 30(1), pages 669-682.
    • Handle: RePEc:ebl:ecbull:eb-09-00661
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    References listed on IDEAS

    as
    1. Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "The Aftermath of Financial Crises," American Economic Review, American Economic Association, vol. 99(2), pages 466-472, May.
    2. Caprio, Gerard & Laeven, Luc & Levine, Ross, 2007. "Governance and bank valuation," Journal of Financial Intermediation, Elsevier, vol. 16(4), pages 584-617, October.
    3. Kroszner, Randall S. & Laeven, Luc & Klingebiel, Daniela, 2007. "Banking crises, financial dependence, and growth," Journal of Financial Economics, Elsevier, vol. 84(1), pages 187-228, April.
    4. Saleem, Kashif, 2009. "International linkage of the Russian market and the Russian financial crisis: A multivariate GARCH analysis," Research in International Business and Finance, Elsevier, vol. 23(3), pages 243-256, September.
    5. Edwin Lambregts & Daniël Ottens, 2006. "The Roots of Banking Crises in Emerging Market Economics: A Panel Data Approach," DNB Working Papers 084, Netherlands Central Bank, Research Department.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Deregulation; Financial crisis; Banking intervention; Logit model;
    All these keywords.

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • G1 - Financial Economics - - General Financial Markets

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