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How did state-owned banks respond to privatization? Evidence from the Indian experiment

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  • Ghosh, Saibal

Abstract

The paper examines the response of banks to privatization. Using data on all state-owned banks for the period 1990-2006, the findings indicate that fully state-owned banks are significantly less profitable than partially privatized ones. The improvements in performance by partially privatized banks are, in fact, sustained after privatization. In addition, the analysis indicates that privatization improves profitability, efficiency and improves bank soundness, while lowering bank risk. While the improvement in bank risk is typically spread out over a much longer period, the progress in terms of profitability and economic efficiency typically occurs in the post-privatization period.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 24716.

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Date of creation: Sep 2010
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Handle: RePEc:pra:mprapa:24716

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Keywords: Banking; Partial privatization; Non-performing loans; Capital adequacy ratio; India;

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