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Is Government Ownership of Banks Really Harmful to Growth?

  • Svetlana Andrianova


  • Panicos Demetriades


  • Anja Shortland


We show that previous results suggesting that government ownership of banks has a negative effect on economic growth are not robust to adding more 'fundamental' determinants of economic grwoth, such as institutions. We also present regression results from a more recent period (1995-2007) which suggest that, if anything, government ownership of banks has been associated with higher long run growth rates, even after controlling for institutions and other variables suggested by the growth literature. Drawing on the current global financial crisis, we provide a conceptual framework which explains why under certain circumstances government owned banks could have a greater effect on economic growth than privately-owned banks.

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Paper provided by Centre for Economic Development and Institutions(CEDI), Brunel University in its series CEDI Discussion Paper Series with number 09-05.

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Length: 17 pages
Date of creation: May 2009
Date of revision:
Handle: RePEc:edb:cedidp:09-05
Contact details of provider: Postal: CEDI, Brunel University,West London,UB8 3PH,United Kingdom
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  1. Delano Villanueva & Abbas Mirakhor, 1990. "Strategies for Financial Reforms: Interest Rate Policies, Stabilization, and Bank Supervision in Developing Countries," IMF Staff Papers, Palgrave Macmillan, vol. 37(3), pages 509-536, September.
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