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Capital Requirements, Banking Supervision and Lending Behavior: Evidence from Tunisia

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  • Guizani, Brahim

Abstract

This paper represents a contribution to the still meager literature on the impact of prudential regulation bank behavior in Tunisia. It aims to examine the effect of the capital requirements on bank credits during the period from 1999 through 2010 and to assess the effectiveness of the banking supervision policy in containing banking system’s risk. For this purpose a dynamic model is built and then an empirical regression is estimated. The results shows that regulatory capital framework has been binding bank lending in Tunisia during the period of study; well-capitalized banks have lent more than less-capitalized ones. Despite the apparent stringency of the bank regulator in Tunisia, banking supervision has been weakly effective in restraining banks’ overall risk. Further strengthening of the banking supervision policy is still needed on the part of the central bank of Tunisia; i.e., the bank regulator.

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  • Guizani, Brahim, 2014. "Capital Requirements, Banking Supervision and Lending Behavior: Evidence from Tunisia," MPRA Paper 54234, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:54234
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    References listed on IDEAS

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    Cited by:

    1. Ken Miyajima, 2020. "What influences bank lending in Saudi Arabia?," Islamic Economic Studies, Emerald Group Publishing Limited, vol. 27(2), pages 125-155, April.

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    More about this item

    Keywords

    capital requirements; Basel Accords; dynamic model; banking supervision; non-performing loans.;
    All these keywords.

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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