Tunisian Banking System Vulnerabilities beyond the Global Financial Crisis and Recent Political Instability

The Tunisian banking sector has weathered the global financial crisis and the revolution’s immediate impacts. Political uncertainty and prevailing social tensions have considerably impacted the activities of certain sectors. The paper aims at examining the implications of the macroeconomic environment on the soundness and performance of Tunisian banks. In other words, the paper purports to identify whether the Tunisian banks’ profitability, liquidity and leverage indicators have been impacted by the world financial crisis and the recent political instability by use of financial soundness indicators during the period 2002-2012. We propose first to analyse the evolution of the economic performance during this period. Second, we attempt to study the repercussions of the economic downturn on the Tunisian banks’ overall soundness and profitability. The results suggest that Tunisian banks remain resilient from the affects of the global financial crisis. Nevertheless, they have been impacted by the revolution’s turmoil. It will be argued that the difficult economic situation resulting from the political changes has enhanced the Tunisian banks’ vulnerability