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Bank Ownership and Performance Does Politics Matter?

Author

Listed:
  • Micco, Alejandro
  • Panizza, Ugo
  • Yañez, Monica
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.

Suggested Citation

  • Micco, Alejandro & Panizza, Ugo & Yañez, Monica, 2006. "Bank Ownership and Performance Does Politics Matter?," POLIS Working Papers 62, Institute of Public Policy and Public Choice - POLIS.
    • Handle: RePEc:uca:ucapdv:62
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    More about this item

    Keywords

    Banking; Privatization; Ownership; Performance;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory

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