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A Panel-corrected Standard Error (PCSE) Framework to Estimate Capital Structure and Banking Performance within the Tunisian Context

Author

Listed:
  • Manel Zidi

    (ESSECT - Ecole Supérieure des Sciences Economiques et Commerciales de Tunis - Université de Tunis)

  • Helmi Hamdi

    (CERGAM - Centre d'Études et de Recherche en Gestion d'Aix-Marseille - AMU - Aix Marseille Université - UTLN - Université de Toulon)

Abstract

The objective of this article is to empirically examine the effect of financing structure on the market share of banks, and their performance in Tunisian banks. To this end, we gathered financial statements of ten commercial banks over the period 2012-2019, and we employed the panel-corrected standard error (PCSE) regression. The empirical results show that the bank capital structure measured by the equity to total assets ratio negatively affects bank performance while the debt to total assets ratio can be a robust and positive driver of bank performance. Through this research, we recommend to Tunisian commercial banks to reduce their operating costs through a better management of their resources, and to find cheaper sources of financing such as increasing equity. We also recommend to Tunisian commercial banks to diversify further their revenues in order to enhance their performance and to generate more profits.

Suggested Citation

  • Manel Zidi & Helmi Hamdi, 2024. "A Panel-corrected Standard Error (PCSE) Framework to Estimate Capital Structure and Banking Performance within the Tunisian Context," Post-Print hal-04616733, HAL.
    • Handle: RePEc:hal:journl:hal-04616733
    DOI: 10.32479/ijefi.15793
    Note: View the original document on HAL open archive server: https://amu.hal.science/hal-04616733
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    More about this item

    Keywords

    Capital Structure; Bank Profitability; Bank Performance JEL Classifications: G21; C23; L2;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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