tailieunhanh - Determinants of bank capital: Case of Tunisia

The capital is essential for increasing the strength and efficiency of the banking system. Indeed, it is interesting to know the determinants of bank capital. In the context of this article, we studied a sample of 18 banks in Tunisia over the period (2000 2013). We found that return on assets, net interest margin, liquidity, rate of inflation, foreign ownership and private ownership affect significantly bank capital. | Journal of Applied Finance Banking vol. 8 no. 2 2018 1-15 ISSN 1792-6580 print version 1792-6599 online Scienpress Ltd 2018 Determinants of bank capital Case of Tunisia Mohamed Aymen Ben Moussa1 Abstract The capital is essential for increasing the strength and efficiency of the banking system. Indeed it is interesting to know the determinants of bank capital. In the context of this article we studied a sample of 18 banks in Tunisia over the period 20 0 0 . .2013 . We found that return on assets net interest margin liquidity rate of inflation foreign ownership and private ownership affect significantly bank capital. JEL classification numbers C23 G21 C32 Keywords Bank capital return on assets net interest margin rate of inflation liquidity foreign ownership private ownership. 1 Introduction Capital is important in banking. One of the essential requirements for banks and financial institutions is adequate and sufficient capital and every banks and financial organizations must keep balance between capital and available risk in its assets in order to guarantee its stability. Bateni et al 2014 . The concept of capital adequacy appeared in the middle of the 1970 s because of the expansion of lending activities in banks without any parallel increase in its capital since capital ratio was measured by total capital divided by total assets Al Sabbagh 2004 . Indeed Sharp 1977 defined capital as a difference between assets and deposits so the larger the ratio of capital to assets or the ratio of capital to deposits to safer the deposits. As capital was adequate deposits were safe enough. His idea was that if the value of an institutions assets may decline in the future its deposits will generally be safer the larger the current value of assets in relation to the value of deposits. Dowd 1999 found in this study that the minimum capital standard s financial institutions can be seen as a means for reinforcing the security of deposits and robustness of banking system. 1 Faculty of