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The impact of control quality on the non-performing loans of Tunisian listed banks

Author

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  • Moufida Ben Saada

Abstract

Purpose - This paper aims to explore the extent to which the control quality impacts non performing loans (NPLs) of Tunisian listed banks by integrating the guidelines of Circular No. 2011-06 issued on 20 May 2011 by Tunisian Central Bank. Design/methodology/approach - Regressions using panel data are applied on a sample of 11 listed banks during the period from 2010 to 2015. Findings - The results show that the presence of foreign directors on the Tunisian bank board affects credit risk. These administrators, with knowledge, independence and technology transfer, exercise more control than institutional administrators or state representatives. The risk committee is more effective than the other committees (audit committee and credit committee) in reducing non-performing loans. The role played by this body is the most important. Practical implications - Testing empirically the impact of control quality on NPL by integrating the guidelines of the Central Bank leads to a better evaluation of reforms’ application and effective measures to strengthen the banking governance practices. Originality value - By exploring the application of the Central Bank’s guidelines for strengthening post-revolutionary banking governance practices, it becomes easy to assess the extent of the Circular No. 2011-06 by accounting practitioners, auditors and authority bodies to give the necessary recommendations for further reforms.

Suggested Citation

  • Moufida Ben Saada, 2018. "The impact of control quality on the non-performing loans of Tunisian listed banks," Managerial Auditing Journal, Emerald Group Publishing, vol. 33(1), pages 2-15, January.
  • Handle: RePEc:eme:majpps:maj-01-2017-1506
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    Citations

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    Cited by:

    1. Moufida Ben Saâda & Yosra Gafsi, 2020. "Does disclosure of internal control system of credit risk improve banks’ performance? Evidence from Tunisian listed banks," International Journal of Financial Engineering (IJFE), World Scientific Publishing Co. Pte. Ltd., vol. 6(04), pages 1-27, February.
    2. Amir, Md. Khaled, 2019. "Does Excess Bank Liquidity Impact Non-Performing Loan? A Study on Bangladeshi Economy," MPRA Paper 101150, University Library of Munich, Germany, revised 10 Aug 2019.
    3. Abdul Aziz Khan Niazi & Suleman Aziz Lodhi & Abdul Basit & Tehmina Fiaz Qazi, 2020. "Tacit Knowledge Sharing Model For Banks: Remedial Measure Of Likelihood Of Default," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 9(1), pages 32-50, March.
    4. Rashedul Hasan & Muhammad Ashfaq, 2021. "Corruption and its diverse effect on credit risk: global evidence," Future Business Journal, Springer, vol. 7(1), pages 1-13, December.
    5. Ballester, Laura & González-Urteaga, Ana & Martínez, Beatriz, 2020. "The role of internal corporate governance mechanisms on default risk: A systematic review for different institutional settings," Research in International Business and Finance, Elsevier, vol. 54(C).

    More about this item

    Keywords

    Board composition; Credit risk; Non-performant loans; G21; G23; G24; G29; C23;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G29 - Financial Economics - - Financial Institutions and Services - - - Other
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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