Abstract:

Using the dynamic panel data methods, the current paper attempts to examine the determinants of non-performing loans (NPLs) in the Tunisian banking sector. The quest is for the variables affecting consumer loans allocation. The hypothesis that both macroeconomic and bank-specific variables have an effect on the quality of loans.

Our results indicate the extent to which NPLs in the Tunisian banking system can be explained particularly by not only macroeconomic variables (GDP, unemployment, interest rates) but also by bad  management quality.