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The challenges of capital account liberalization in Tunisia (1984–2020): the importance of the institutional dimension

Author

Listed:
  • Mahdi Mnasri

    (University of Sfax)

  • Niazi Kammoun

    (University of Sfax)

  • Patrick Dieuaide

    (Sorbonne Nouvelle University, ICEE-European Studies-EA 2291, Research House)

Abstract

This article aims to analyze the impact of the opening of the capital account on economic performance in Tunisia while highlighting the importance of institutional factors. The empirical analysis covers the period from 1984 to 2020 and uses the Autoregressive Distributed Lag (ARDL) method. The results obtained reveal that in the short term, institutional development has a mixed impact on economic growth. On the other hand, in the long term, this impact becomes positive, while the opening of the capital account has a significantly negative effect on growth. Also, we find a bidirectional causality between economic growth and financial openness. These results allow us to deduce that the relationship between these two components could be non-linear and highlight threshold effects in terms of institutional development. This is why the Tunisian authorities must strengthen financial and institutional reforms in order to meet the prerequisites for external financial liberalization in the service of economic growth and employment.

Suggested Citation

  • Mahdi Mnasri & Niazi Kammoun & Patrick Dieuaide, 2025. "The challenges of capital account liberalization in Tunisia (1984–2020): the importance of the institutional dimension," SN Business & Economics, Springer, vol. 5(4), pages 1-22, April.
    • Handle: RePEc:spr:snbeco:v:5:y:2025:i:4:d:10.1007_s43546-025-00805-y
    DOI: 10.1007/s43546-025-00805-y
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    Keywords

    Financial openness; Institutional development; Financial development; Economic growth; ARDL model; Tunisia;
    All these keywords.

    JEL classification:

    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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