Governance and Performance of Tunisian banks

Trabelsi, Mohamed Ali (2010): Governance and Performance of Tunisian banks. Published in: International Journal of Economics and Finance , Vol. 3, No. 2 (2010): pp. 189-198.

Abstract

Developing banking standards is an important process for a country’s financial and economic well being. Their importance incites governments to insure the stability and the performance of their banking systems. Accordingly, several researchers pay a particular attention to banking governance. Specifically, shareholders-managers’ convergence of interests and the possible repercussions of these on banks’ performance can be avoided only by implementing a solid system of governance. The main purpose of this article is to determine the impact of governance on the performance of banks, through an empirical study of a sample of 10 Tunisian banks during the period 1997-2007. Our empirical investigation shows a positive association between external administrators and performance. It is worth signaling that a high number of administrators results in a negative effect on performance. The results also reveal that managers lack control in favor of the board of directors which seems to enjoy a lot of power. This state of affairs seems to relay from the fact of associating the role of the manager with that of the board of directors. Finally, our results reveal a negative association between the presence of a group of dominant shareholders and performance, a phenomenon which might be explained in terms of private appropriation of benefits.

• Item Type: MPRA Paper
• Language: English
• Keywords: Banks, Corporate governance, Board of directors, Ownership structure, Performance, Shareholders, Managers.
• Subjects: G - Financial Economics > G3 - Corporate Finance and Governance > G32 - Financing Policy ; Financial Risk and Risk Management ; Capital and Ownership Structure ; Value of Firms ; Goodwill; G - Financial Economics > G3 - Corporate Finance and Governance > G34 - Mergers ; Acquisitions ; Restructuring ; Corporate Governance

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