The role of regulatory quality in financial development in Tunisia[Le rôle de la qualité réglementaire dans le développement financier en Tunisie]

This study analyzes the impact of institutional quality on financial development in Tunisia during the period 2000–2024. The main objective is to determine whether regulatory quality influences financial depth, measured by domestic credit to the private sector as a percentage of GDP. The theoretical framework draws on institutional theory, financial regulation theory, and the institutional channel of financial development. These approaches emphasize the role of institutions in reducing uncertainty, protecting property rights, and improving capital allocation. Empirically, the study uses the Autoregressive Distributed Lag (ARDL) model to examine short- and long-term relationships. The results of the bounds test confirm the existence of a cointegrating relationship between the variables. The estimation reveals that regulatory quality has a negative and statistically significant effect on financial depth, both in the short and long term. This result is corroborated by robustness estimates (FMOLS, DOLS, and CCR). Contrary to the prevailing literature, which highlights a positive effect of institutions on financial development, the results obtained in the Tunisian case suggest an effect of prudential discipline. Improvements to the regulatory framework appear to be accompanied by stricter control of bank credit, reflecting a trade-off between stability and financial expansion. Thus, institutional quality emerges as a fundamental determinant of financial development, but its impact depends on the structural context and the maturity level of the banking system.