What are the determinants of bank interest margin and profitability in the Tunisian context?

The aim of this paper is to investigate the determinants of net interest margins and profitability of banks in the Tunisian banking context during the period 1999 to 2018, during Subprimes crisis and during the Jasmine revolution. Using double clusters regression, we find that the individual characteristics (size, lending activities and capitalization, non-interest activities) of the bank have a considerable impact on bank interest margins and net profitability, GDP growth has a positive effect on banks' net interest margins, concentration is less beneficial to Tunisian banks than competition and the development of the relative size has a positive effect on banks profitability. During the financial crisis, the internal and macroeconomic determinants of profitability have not changed. Only lending activities have a negative effect on profitability after the crisis. During the revolution, concerning the internal determinants of profitability, a higher profitability is associated with bank loans, size and efficiency. For macroeconomic determinants, only inflation has a negative impact on net interest margins. The effect of concentration of banking market and relative size of banks has turning on a positive and significant one on net interest margins during the post-revolution period. Whereas, the banking sector size has a negative effect on banks' profitability.