Mardi | 2012-03-27
Abdelkader BOUDRIGA – Neila BOULILA TAKTAK – Sana JELLOULI
The paper empirically analyses the determinants of problem loans and the potential impact of both business and institutional environ¬ment on credit risk exposure of banks in the MENA region. Looking at a sample of 46 banks in 12 countries over the period 2002-2006, we find that, among bank specific factors, high credit growth, loan loss provisions, and foreign participation coming from developed countries reduce the NPL level. However, highly capitalized banks experience high level of credit exposure. Credit quality of banks is also positively affected by the relevance of the information published by public and private bureaus. Finally, our findings highlight the importance of institutional environ¬ment in enhancing banks credit quality. Specifically, a more control of corruption, a sound regulatory quality, a better enforcement of rule of law, and a free voice and accountability play an important role in reducing nonperforming loans in the MENA countries.