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The Impact of States Owned Banks on Interest Rates Spread

  • Alexandre Rands

    ()

    (Datamétrica Consultoria, Pesquisa e Telemarketing)

This paper develops the hypothesis that the co-existence of state owned banks with privately owned banks together tends to raise interest rates spreads and profitability of privately owned banks. This hypothesis can help explain the relationship between the share of state owned banks and total banking assets and economic growth, as reported in the literature. Three empirical tests of the two parts of the main hypothesis are presented. Two of them rely on Brazilian monthly time series data and the other one uses a cross section regression with data for a sample of countries. One of them builds on an estimation of an expanded version of the composition of a rate of return of an asset under the market efficient hypothesis. Another one estimates a factor augmented vector autoregression (FAVAR) model. All of these tests give support to the hypotheses tested.

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File URL: ftp://200.249.56.210/RePEc/dtm/wpaper/TheImpactofStateOwnedBanksonInterestRatesSpread42.pdf
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File Function: Revised version, 2005.
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Paper provided by Datamétrica Consultoria Econômica in its series Working Papers with number 42.

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Length: 20 pages
Date of creation: 2005
Date of revision: 2005
Publication status: Published in Anais do XXXIII Encontro Nacional de Economia, 2005.
Handle: RePEc:dtm:wpaper:42
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  1. Alejandro Micco & Ugo Panizza, 2006. "Bank Ownership and Lending Behavior," Working Papers Central Bank of Chile 369, Central Bank of Chile.
  2. U. Tun Wai, 1956. "Interest Rates in the Organized Money Markets of Underdeveloped Countries," IMF Staff Papers, Palgrave Macmillan, vol. 5(2), pages 249-278, August.
  3. Andrei Shleifer, 1998. "State Versus Private Ownership," NBER Working Papers 6665, National Bureau of Economic Research, Inc.
  4. Rodrik, Dani & Alesina, Alberto, 1994. "Distributive Politics and Economic Growth," Scholarly Articles 4551798, Harvard University Department of Economics.
  5. Oded Galor & Omer Moav, 1999. "From Physical to Human Capital Accumulation: Inequality in the Process of Development," Working Papers 99-27, Brown University, Department of Economics.
  6. Rafael La Porta & Florencio Lopez-De-Silanes & Andrei Shleifer, 2002. "Government Ownership of Banks," Journal of Finance, American Finance Association, vol. 57(1), pages 265-301, 02.
  7. Ben S. Bernanke & Jean Boivin & Piotr Eliasz, 2004. "Measuring the Effects of Monetary Policy: A Factor-Augmented Vector Autoregressive (FAVAR) Approach," NBER Working Papers 10220, National Bureau of Economic Research, Inc.
  8. Eduardo Levy Yeyati & Alejandro Micco & Ugo Panizza, 2004. "Should the Government Be in the Banking Business?: The Role of State-Owned and Development Banks," IDB Publications (Working Papers) 6684, Inter-American Development Bank.
  9. Sapienza, Paola, 2002. "What Do State-Owned Firms Maximize? Evidence from the Italian Banks," CEPR Discussion Papers 3168, C.E.P.R. Discussion Papers.
  10. Andrei Shleifer & Robert W. Vishny, 1994. "The Politics of Market Socialism," Journal of Economic Perspectives, American Economic Association, vol. 8(2), pages 165-176, Spring.
  11. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2004. "The Role of Social Capital in Financial Development," American Economic Review, American Economic Association, vol. 94(3), pages 526-556, June.
  12. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May.
  13. Tiago V. de V. Cavalcanti & Anne P. Villamil & Antonio Antunes, 2007. "On the Welfare and Distributional Implications of Intermediation Costs," 2007 Meeting Papers 621, Society for Economic Dynamics.
  14. Blanchard, Olivier Jean & Kiyotaki, Nobuhiro, 1987. "Monopolistic Competition and the Effects of Aggregate Demand," American Economic Review, American Economic Association, vol. 77(4), pages 647-66, September.
  15. Persson, T. & Tabellini, G., 1993. "Is Inequality Harmful for Growth," Papers 537, Stockholm - International Economic Studies.
  16. Newey, Whitney & West, Kenneth, 2014. "A simple, positive semi-definite, heteroscedasticity and autocorrelation consistent covariance matrix," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 33(1), pages 125-132.
  17. Kane, Edward J, 1977. "Good Intentions and Unintended Evil: The Case against Selective Credit Allocation," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 9(1), pages 55-69, February.
  18. Perotti, Roberto, 1996. " Growth, Income Distribution, and Democracy: What the Data Say," Journal of Economic Growth, Springer, vol. 1(2), pages 149-87, June.
  19. António R. Antunes & Tiago V. de V. Cavalcanti & Anne Villamil, 2005. "Intermediation costs, investor protection and economic development," Working Papers w200507, Banco de Portugal, Economics and Research Department.
  20. Thorsten Beck & Ross Levine & Norman Loayza, 1999. "Financial Intermediation and Growth: Causality and Causes," Working Papers Central Bank of Chile 56, Central Bank of Chile.
  21. Kristin J. Forbes, 2000. "A Reassessment of the Relationship between Inequality and Growth," American Economic Review, American Economic Association, vol. 90(4), pages 869-887, September.
  22. Abhijit V. Banerjee & Esther Duflo, 2000. "Inequality and Growth: What Can the Data Say?," NBER Working Papers 7793, National Bureau of Economic Research, Inc.
  23. Engle, Robert F & Granger, Clive W J, 1987. "Co-integration and Error Correction: Representation, Estimation, and Testing," Econometrica, Econometric Society, vol. 55(2), pages 251-76, March.
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