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Is Government Ownership of Banks Really Harmful to Growth?

  • Panicos Demetriades


  • Svetlana Andrianova


  • Anja Shortland

We show that previous results suggesting that government ownership of banks is associated with lower long run growth rates are not robust to adding more “fundamental” determinants of economic growth. We also present new cross-country evidence for 1995- 2007 which suggests that, if anything, government ownership of banks has been robustly associated with higher long run growth rates. While acknowledging that cross-country results need not imply causality, we nevertheless provide a conceptual framework, drawing on the global financial crisis of 2008-09, which explains why under certain circumstances government owned banks could be more conducive to economic growth than privately-owned banks.

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Paper provided by Department of Economics, University of Leicester in its series Discussion Papers in Economics with number 09/11.

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Date of creation: May 2009
Date of revision: Dec 2009
Handle: RePEc:lec:leecon:09/11
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