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Abstract
This article examines the determinants of Net Interest Margins (NIM) in Tunisia and tests some of the bank's characteristics that are derived mainly from the dealership model (Ho and Saunders, Citation1981). The research considers the heterogeneity of individual banks through the use of random-effect as well as fixed-effect models. It tests the robustness of the results by running the Wooldridge test for autocorrelation in panel data and robust cluster estimation. Operating Costs (OC) and Bank Capital (BC) are found to be consistent to the theoretical model implying positive association to NIM. In addition, NIM is positively related to Opportunity Costs of Bank Reserves (OCBR), Implicit Interest Payments (IIP) and negatively related to Quality of Management (QM).