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A Reappraisal of State-Owned Banks


  • Eduardo Levy-Yeyat


  • Alejandro Micco


  • Ugo Panizza



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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  • Eduardo Levy-Yeyat & Alejandro Micco & Ugo Panizza, 2007. "A Reappraisal of State-Owned Banks," ECONOMIA JOURNAL OF THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION, ECONOMIA JOURNAL OF THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION, vol. 0(Spring 20), pages 209-259, January.
  • Handle: RePEc:col:000425:008639

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    References listed on IDEAS

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    Cited by:

    1. Andersson, Fredrik N.G. & Burzynska, Katarzyna & Opper, Sonja, 2014. "Lending for Growth? A Granger Causality Analysis of China's Finance-Growth Nexus," Knut Wicksell Working Paper Series 2014/6, Lund University, Knut Wicksell Centre for Financial Studies.
    2. Rose, Andrew K. & Wieladek, Tomasz, 2012. "Too big to fail: Some empirical evidence on the causes and consequences of public banking interventions in the UK," Journal of International Money and Finance, Elsevier, vol. 31(8), pages 2038-2051.
    3. Torres, Ernani & Zeidan, Rodrigo, 2016. "The life-cycle of national development banks: The experience of Brazil's BNDES," The Quarterly Review of Economics and Finance, Elsevier, vol. 62(C), pages 97-104.
    4. Farazi, Subika & Feyen, Erik & Rocha, Roberto, 2011. "Bank ownership and performance in the Middle East and North Africa region," Policy Research Working Paper Series 5620, The World Bank.
    5. Gutierrez, Eva & Rudolph, Heinz P. & Homa, Theodore & Beneit, Enrique Blanco, 2011. "Development banks : role and mechanisms to increase their efficiency," Policy Research Working Paper Series 5729, The World Bank.
    6. Andrianova, Svetlana, 2012. "Public banks and financial stability," Economics Letters, Elsevier, vol. 116(1), pages 86-88.
    7. Rose, Andrew & Wieladek, Tomasz, 2012. "Too big to fail: some empirical evidence on the causes and consequences of public banking interventions in the United Kingdom," Bank of England working papers 460, Bank of England.
    8. Andersson, Fredrik N. G. & Burzynska, Katarzyna & Opper, Sonja, 2013. "Lending for Growth? An Analysis of State-Owned Banks in China," Working Papers 2013:19, Lund University, Department of Economics.

    More about this item


    Banking; Privatization; Public banks; Financial development; Latin America;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance


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