Government Ownership of Banks

Rafael La Porta, Florencio Lopez-de-Silanes () and Andrei Shleifer

Working Paper Series from Harvard University, John F. Kennedy School of Government

Abstract: In this paper we investigate a neglected aspect of financial systems of many countries around the world: government ownership of banks. We assemble data which establish four findings. First, government ownership of banks is large and pervasive around the world. Second, such ownership is greater in countries with low levels of per capita income, backward financial systems, interventionist and inefficient governments, and poor protection of property rights. Third, higher government ownership of banks in 1970 is associated with slower subsequent financial development. Finally, higher government ownership of banks in1970 is associated with lower subsequent growth of per capita income, and in particular with lower growth of productivity rather than slower factor accumulation. This evidence is inconsistent with the optimistic "development" theories of government ownership of banks common in the 1960s, but supports the more recent "political" theories of the effects of government ownership of firms.

Date: 2001-05
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Citations: View citations in EconPapers (23)

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Related works:
Journal Article: Government Ownership of Banks (2002)
Working Paper: Government Ownership of Banks (2002)
Working Paper: Government Ownership of Banks (2000)
Working Paper: Government Ownership of Banks (2000)
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Persistent link: https://EconPapers.repec.org/RePEc:ecl:harjfk:rwp01-016

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