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Efficiency and Market Power in Tunisian Banking

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Contemporary Research in Accounting and Finance

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Abstract

In the last three decades, the banking structure in Tunisia has witnessed a consistent weakening in concentration, expansion of foreign capital, shrinking of state ownership and the entry of new Islamic banks. These developments may suggest that the prevailing competitive conditions have improved and that banks have relinquished the features of the quiet life. This study explores the relationship between bank cost and profit efficiency levels and market power in Tunisia by testing the Hicks’ quiet life hypothesis. The results reject the quiet life hypothesis but cannot reject the relative market power hypothesis in Tunisian banking. Nevertheless, the findings show that the market power-efficiency relationship is sensitive to ownership types. Strong evidence emerges supporting the quiet life hypothesis for the banques publiques and generally domestically owned banks, whereas it is rejected for foreign banks. These findings may be presented as an argument supporting the privatisation of state banks, preferably for the benefit of foreign capital.

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Authors and Affiliations

  1. Business Department, Higher Colleges of Technology, Dubai, United Arab Emirates

    Abderazak Bakhouche, Mohamed Lotfi Boulkeroua, Randa Elchaar & Anca Bocanet

  2. Economics Department, MENA College of Management, Dubai, United Arab Emirates

    Anissa Naouar

  3. Strategic Leadership, Amity Group, Dubai, UAE

    Eman Zabalawi

Authors
  1. Abderazak Bakhouche
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  2. Anissa Naouar
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  3. Mohamed Lotfi Boulkeroua
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  4. Randa Elchaar
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  5. Anca Bocanet
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  6. Eman Zabalawi
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Correspondence to Abderazak Bakhouche .

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Editors and Affiliations

  1. Higher Colleges of Technology, Dubai, United Arab Emirates

    Abdelghani Echchabi

  2. Higher Colleges of Technology, Dubai, United Arab Emirates

    Rihab Grassa

  3. Higher Colleges of Technology, Dubai, United Arab Emirates

    Welcome Sibanda

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Bakhouche, A., Naouar, A., Boulkeroua, M.L., Elchaar, R., Bocanet, A., Zabalawi, E. (2022). Efficiency and Market Power in Tunisian Banking. In: Echchabi, A., Grassa, R., Sibanda, W. (eds) Contemporary Research in Accounting and Finance. Palgrave Macmillan, Singapore. https://doi.org/10.1007/978-981-16-8267-4_1

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