Privatization Matters: Bank Efficiency in Transition Countries
AbstractTo investigate the impact of bank privatization in transition countries, we take the largest banks in six relatively advanced countries, namely, Bulgaria, the Czech Republic, Croatia, Hungary, Poland and Romania. Income and balance sheet characteristics are compared across four bank ownership types. Efficiency measures are computed from stochastic frontiers and used in ownership and privatization regressions having dummy variables for bank type. Our empirical results support the hypotheses that foreign-owned banks are most efficient and governmentowned banks are least efficient. In addition, the importance of attracting a strategic foreign owner in the privatization process is confirmed. However, counter to the conjecture that foreign banks cream skim, we find that domestic banks have a local advantage in pursuing fee-forservice business. Finally, we show that both the method and the timing of privatization matter to efficiency; specifically, voucher privatization does not lead to increased efficiency and earlyprivatized banks are more efficient than later-privatized banks even though we find no evidence of a selection effect.
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Bibliographic InfoPaper provided by William Davidson Institute at the University of Michigan in its series William Davidson Institute Working Papers Series with number 2004-679.
Length: 32 pages
Date of creation: 01 Apr 2004
Date of revision:
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bank efficiency; bank privatization; strategic foreign owner; transition countries;
Other versions of this item:
- Bonin, John P. & Hasan, Iftekhar & Wachtel, Paul, 2005. "Privatization matters: Bank efficiency in transition countries," Journal of Banking & Finance, Elsevier, vol. 29(8-9), pages 2155-2178, August.
- Paul Wachtel & John Bonin & Iftekhar Hasan, 2004. "Privatization Matters: Bank Efficiency in Transition Countries," Working Papers 04-06, New York University, Leonard N. Stern School of Business, Department of Economics.
- Bonin, John P. & Hasan, Iftekhar & Wachtel, Paul, 2004. "Privatization matters: Bank efficiency in transition countries," BOFIT Discussion Papers 8/2004, Bank of Finland, Institute for Economies in Transition.
- P30 - Economic Systems - - Socialist Institutions and Their Transitions - - - General
- P34 - Economic Systems - - Socialist Institutions and Their Transitions - - - Finance
- P52 - Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-06-02 (All new papers)
- NEP-EEC-2004-06-02 (European Economics)
- NEP-EFF-2004-06-02 (Efficiency & Productivity)
- NEP-MFD-2004-06-02 (Microfinance)
- NEP-TRA-2004-06-02 (Transition Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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