Bank Competition and Risk Appetite: Evidence from Tunisia

ZAGHDOUDI, Khemais and HAMDI, Helmi and DKHILI, Hichem and HAKIMI, Abdelaziz (2015): Bank Competition and Risk Appetite: Evidence from Tunisia.

Abstract

In this paper, we investigate whether bank competition increases risk taking for the case of the Tunisian banks. Our data set covers nine Tunisian banks observed during the period from1980 to 2009 and we conducted an econometric model based on panel data estimations. The econometric results reveal the presence of a positive relationship between competition and bank risk taking. This shows that the functions of Tunisian banks remain based on the basic traditional activities and banks need to diversify their activities in safe functions to keep the banking sector stable and avoid bank failure.

• Item Type: MPRA Paper
• Language: English
• Keywords: Bank competition, Tunisian banks, Bank risk taking, Panel data analysis.
• Subjects: G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L11 - Production, Pricing, and Market Structure ; Size Distribution of Firms

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