Bank Ownership and Performance Does Politics Matter?

Alejandro Micco (), Ugo Panizza and Monica Yañez

P.O.L.I.S. department's Working Papers from Department of Public Policy and Public Choice - POLIS

Abstract: This paper uses a new dataset to reassess the relationship between bank ownership and bank performance, providing separate estimations for developing and industrial countries. It finds that state-owned banks located in developing countries tend to have lower profitability and higher costs than their private counterparts, and that the opposite is true for foreign-owned banks. The paper finds no strong correlation between ownership and performance for banks located in industrial countries. Next, in order to test whether the differential in performance between public and private banks is driven by political considerations, the paper checks whether this differential widens during election years; it finds strong support for this hypothesis.

Keywords: Banking; Privatization; Ownership; Performance (search for similar items in EconPapers)
JEL-codes: G21 D21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eff, nep-fin, nep-fmk and nep-pol
Date: 2006-02
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Downloads: (external link)
http://polis.unipmn.it/pubbl/RePEc/uca/ucapdv/panizza68.pdf (application/pdf)

Related works:
Working Paper: Bank Ownership and Performance Does Politics Matter? (2005)
Journal Article: Bank ownership and performance. Does politics matter? (2007)
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