Impact of high and low-level capabilities on bank performance

Abstract

This study uses the resource-based view of the firm as a theoretical framework to examine the effect of high-level and low-level bank capabilities on market performance. A typology of bank capabilities was developed using an input/output approach to assess these capabilities. An empirical analysis was conducted on Tunisian deposit banks listed on the stock market. The data envelopment analysis (DEA) method was used to estimate the banks' capacities. The findings reveal that high-level bank capabilities are the key factors driving superior and sustainable performance. Additionally, the study confirms that horizontal coherence, achieved through aligning certain low-level capabilities, has a significant positive impact on bank performance.