A reappraisal of State-Owned Banks

Economia 01/2007; DOI: 10.1353/eco.2007.0015
Source: RePEc

ABSTRACT We revisit the public banks debate, survey the theoretical arguments and test the robustness (and expand) the existing empirical evidence. While we find some support for the view that public banks do not allocate credit optimally, we also report indicative evidence that they exert a positive influence on private bank efficiency, and may contribute to reduce credit procyclicality. Ultimately, we find that the recent criticism to public banks has generally been based on inconclusive cross-country evidence. More specific bank-level research is still needed to substantiate a case for or against public banks in developing economies.

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    ABSTRACT: Whether state-owned banks are growth promoting or not is highly contested given the assumed disincentives associated with public ownership. Bank efficiency, however, does not only depend on distinct ownership regimes, but also on the bank’s main functions, lending strategies and market competition. This paper provides a first comparative analysis of different types of publicly owned banks operating in China between the year 1997 and 2008. Using principal component analysis and Granger-causality tests, this study shows that China’s state-owned commercial banks, and rural credit cooperatives did not promote GDP-growth during the observation period. State-owned commercial banks even had a negative growth effect on the manufacturing sector. By contrast, state policy banks and joint stock commercial bank did in fact promote domestic growth. China’s experience suggests a more nuanced account of state-banking looking beyond the role of ownership, to incorporate functional and institutional differences.
    Department of Economics, Lund University, Working paper series. 07/2013;
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    ABSTRACT: After the crisis and recent State interventions, the private nature of banks and their role in terms of public interest has been strongly questioned. In the new scenario, is there a scope for public banks? And what should be the regulatory framework to ensure that their strategy and management is in line with their mission?
    Bancaria. 01/2012; 68(12):3-25.

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