The impact of regulatory capital pressure on profitability and risk: Evidence from Tunisian banks

October 7, 2022
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The paper analyses the effect of regulatory pressure on bank behaviour, using a sample of Tunisian banks covering the period 2005-2020. Firstly, the paper examines the impact of regulatory capital on bank profitability and risk. Secondly, it contributes to the literature which has received scant attention from researchers investigating the nonlinear impact of regulatory pressure on bank behaviour. Thirdly, it considers different determinants of bank profitability and risk. Finally, it uses both static and dynamic models to test for the persistence of bank profitability and risk, as well as to make sure that the results are not biased by endogeneity.