The effect of Strategic Sale of Banks: Evidence from Indonesia
We examine the effect of strategic sale—the sale of banks to strategic foreign investors—on banks’ performance. The Government of Indonesia implemented such a policy as a part of bank restructuring in the aftermath of the 1998 banking crisis. Using difference-in-difference models, we find that strategic sale leads to 12%-15% cost reduction. These results are robust to the use of other estimators such as difference-in-difference matching-estimators and stochastic-frontier analysis, to that of other performance measures such as return on assets and net interest margin, and also to that of different types of samples. These suggest that strategic sale could play an important role in restructuring troubled banks in developing countries.
|Date of creation:||May 2007|
|Date of revision:|
|Contact details of provider:|| Web page: http://www.fas.nus.edu.sg/ecs/scape/index.html|
More information through EDIRC
References listed on IDEAS
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.:
- Gerard Caprio, Jr. and Patrick Honohan, 2008.
The Institute for International Integration Studies Discussion Paper Series
- 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.
- 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.
- John P. Bonin & Iftekhar Hasan & Paul Wachtel, 2004. "Privatization Matters: Bank Efficiency in Transition Countries," William Davidson Institute Working Papers Series 2004-679, William Davidson Institute at the University of Michigan.
- Clarke, George R.G. & Cull, Robert & Fuchs, Michael, 2007.
"Bank privatization in Sub-Saharan Africa : the case of Uganda commercial bank,"
Policy Research Working Paper Series
4407, The World Bank.
- Clarke, George R.G. & Cull, Robert & Fuchs, Michael, 2009. "Bank Privatization in Sub-Saharan Africa: The Case of Uganda Commercial Bank," World Development, Elsevier, vol. 37(9), pages 1506-1521, September.
- Megginson, William L., 2005. "The economics of bank privatization," Journal of Banking & Finance, Elsevier, vol. 29(8-9), pages 1931-1980, August.
- Mohamed Ariff & Luc Can, 2009.
"IMF Bank-Restructuring Efficiency Outcomes: Evidence from East Asia,"
Journal of Financial Services Research,
Springer, vol. 35(2), pages 167-187, April.
- Mohamed Ariff & Luc Can, 2008. "Imf Bank-Restructuring Efficiency Outcomes:Evidence From East Asia," CARF F-Series CARF-F-128, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
- Mohamed Ariff & Luc Can, 2009. "IMF Bank-Restructuring Efficiency Outcomes: Evidence from East Asia," CARF F-Series CARF-F-148, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
- Sato, Yuri, 2005. "Bank restructuring and financial institution reform in Indonesia," The Developing Economies, Institute of Developing Economies, Japan External Trade Organization(JETRO), vol. 43(1), pages 91-120, March.
- Shirley, Mary & Walsh, Patrick, 2000. "Public versus private ownership : the current state of the debate," Policy Research Working Paper Series 2420, The World Bank.
- Adrian E. Tschoegl, 2004. "Financial Crises and the Presence of Foreign Banks," International Finance 0405016, EconWPA.
- Honohan, Patrick & Klingebiel, Daniela, 2003. "The fiscal cost implications of an accommodating approach to banking crises," Journal of Banking & Finance, Elsevier, vol. 27(8), pages 1539-1560, August.
- Cornett, Marcia Millon & Guo, Lin & Khaksari, Shahriar & Tehranian, Hassan, 2010. "The impact of state ownership on performance differences in privately-owned versus state-owned banks: An international comparison," Journal of Financial Intermediation, Elsevier, vol. 19(1), pages 74-94, January.
- Michael Bordo & Barry Eichengreen & Daniela Klingebiel & Maria Soledad Martinez-Peria, 2001. "Is the crisis problem growing more severe?," Economic Policy, CEPR;CES;MSH, vol. 16(32), pages 51-82, 04.
- Haber, Stephen, 2005. "Mexico's experiments with bank privatization and liberalization, 1991-2003," Journal of Banking & Finance, Elsevier, vol. 29(8-9), pages 2325-2353, August.
- Alejandro Micco & Ugo Panizza & Monica Yañez, 2005.
"Bank Ownership and Performance Does Politics Matter?,"
Working Papers Central Bank of Chile
356, Central Bank of Chile.
- Micco, Alejandro & Panizza, Ugo & Yanez, Monica, 2007. "Bank ownership and performance. Does politics matter?," Journal of Banking & Finance, Elsevier, vol. 31(1), pages 219-241, January.
- Micco, Alejandro & Panizza, Ugo & YaÃƒÂƒÃ‚Â±ez, Monica, 2006. "Bank Ownership and Performance Does Politics Matter?," POLIS Working Papers 62, Institute of Public Policy and Public Choice - POLIS.
- Calomiris, Charles W & Klingebiel, Daniela & Laeven, Luc, 2004. "A taxonomy of financial crisis resolution mechanisms : cross-country experience," Policy Research Working Paper Series 3379, The World Bank.
- Williams, Jonathan & Nguyen, Nghia, 2005. "Financial liberalisation, crisis, and restructuring: A comparative study of bank performance and bank governance in South East Asia," Journal of Banking & Finance, Elsevier, vol. 29(8-9), pages 2119-2154, August.
- Heckman, James J & Ichimura, Hidehiko & Todd, Petra E, 1997. "Matching as an Econometric Evaluation Estimator: Evidence from Evaluating a Job Training Programme," Review of Economic Studies, Wiley Blackwell, vol. 64(4), pages 605-54, October.
- Mari Pangestu & Manggi Habir, 2002. "The Boom, Bust and Restructuring of Indonesian Banks," IMF Working Papers 02/66, International Monetary Fund.
- Cludia M. Buch, 1997. "Opening up for foreign banks: How Central and Eastern Europe can benefit," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 5(2), pages 339-366, November.
- Otchere, Isaac, 2009. "Competitive and value effects of bank privatization in developed countries," Journal of Banking & Finance, Elsevier, vol. 33(12), pages 2373-2385, December.
- Clarke, George R.G. & Cull, Robert & Shirley, Mary M., 2005. "Bank privatization in developing countries: A summary of lessons and findings," Journal of Banking & Finance, Elsevier, vol. 29(8-9), pages 1905-1930, August.
- Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, vol. 20(2), pages 325-32.
- Omran, Mohammed, 2007. "Privatization, State Ownership, and Bank Performance in Egypt," World Development, Elsevier, vol. 35(4), pages 714-733, April.
When requesting a correction, please mention this item's handle: RePEc:sca:scaewp:0709. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.