Productive Efficiency in the Banking Sector: An Analysis of Bank-Specific, Industry, and Macroeconomic Determinants in Tunisia

Abstract

This study examines the influence of bank-specific characteristics, market structure, and macroeconomic indicators on productive efficiency within the Tunisian banking sector over the period 2007–2023. To this end, we employ an extended version of the Stochastic Frontier Approach (SFA) that incorporates a bank-specific truncation parameter. Two key findings emerge from the analysis. First, a greater emphasis on credit activity relative to other output dimensions acts as a significant driver of productive efficiency, and improvements in efficiency levels are closely associated with managerial capability. Second, empirical results indicate that both macroeconomic conditions and the competitive structure of the banking market exert a substantial impact on banks’ productive efficiency.