The influence of politically connected CEOs on performance and credit risk: evidence from post-revolution Tunisia's banking sector

This study examines how CEO political connections affect bank performance and credit risk in Tunisia (2012–2023), while assessing the moderating roles of governance reforms, ownership structure and the COVID-19 crisis. Using GLS estimations on a sample of listed banks, we test interaction effects and validate robustness through alternative performance (ROE, Z-score and capital ratio) and risk (LLP) indicators. Political ties significantly reduce profitability and increase credit risk. However, the 2016 banking reform offsets these effects by strengthening governance. Public ownership is associated with higher risk, but not correlated with lower performance. During COVID-19, connected banks faced less credit risk, likely due to privileged public support. Results stress the need for strong governance and independent oversight to limit political interference and ensure banking stability. This research provides novel evidence from a post-revolution emerging market by linking political connections with institutional reforms and external shocks.

• Publication year

  2025

• Venue

  Review of Behavioral Finance

• Publication date

  2025-10-20

• Fields of study

  Not labeled

• Identifiers
  DOI 10.1108/rbf-03-2025-0126
• External record

  Open on Semantic Scholar

• Source metadata

  Semantic Scholar

• No claims are published for this paper.

• No concepts are published for this paper.

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