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The Long Shadow of Public Interventions in the Financial Sector

Author

Listed:
  • Giovanni Dell’Ariccia

    (IMF
    CEPR)

  • Deniz Igan

    (IMF
    CEPR
    BIS)

  • Paolo Mauro

    (IMF)

  • Hala Moussawi

    (Stanford University)

  • Alexander F. Tieman

    (IMF)

  • Aleksandra Zdzienicka

    (IMF)

Abstract

We take stock of the costs of government interventions in the financial sector over the period 2007–2017 and track the assets still under government control. We build a new bank-level dataset on interventions and holding divestitures covering 1114 financial institutions in 37 countries. At end-2017, few countries had fully divested their financial sector holdings. On average, public holdings were divested faster in more capitalized, profitable, and liquid banks. They remained higher in countries where private investment and credit growth grew slower, financial access, depth, efficiency, and competition were worse, and financial stability improved less.

Suggested Citation

  • Giovanni Dell’Ariccia & Deniz Igan & Paolo Mauro & Hala Moussawi & Alexander F. Tieman & Aleksandra Zdzienicka, 2022. "The Long Shadow of Public Interventions in the Financial Sector," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 70(2), pages 212-250, June.
    • Handle: RePEc:pal:imfecr:v:70:y:2022:i:2:d:10.1057_s41308-022-00158-8
    DOI: 10.1057/s41308-022-00158-8
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    More about this item

    Keywords

    Financial crisis; Government interventions; Bank resolution;
    All these keywords.

    JEL classification:

    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • G20 - Financial Economics - - Financial Institutions and Services - - - General

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