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Bank Ownership and Performance Does Politics Matter?

  • Micco, Alejandro
  • Panizza, Ugo
  • Yañez, Monica

This paper uses a new dataset to reassess the relationship between bank ownership and bank performance, providing separate estimations for developing and industrial countries. It finds that state-owned banks located in developing countries tend to have lower profitability and higher costs than their private counterparts, and that the opposite is true for foreign-owned banks. The paper finds no strong correlation between ownership and performance for banks located in industrial countries. Next, in order to test whether the differential in performance between public and private banks is driven by political considerations, the paper checks whether this differential widens during election years; it finds strong support for this hypothesis.

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File URL: http://polis.unipmn.it/pubbl/RePEc/uca/ucapdv/panizza68.pdf
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Paper provided by Institute of Public Policy and Public Choice - POLIS in its series POLIS Working Papers with number 62.

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Length: 34 pages
Date of creation: Feb 2006
Date of revision:
Handle: RePEc:uca:ucapdv:62
Contact details of provider: Web page: http://polis.unipmn.it

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  23. Barth, James R. & Caprio Jr., Gerard & Levine, Ross, 1999. "Financial regulation and performance : cross-country evidence," Policy Research Working Paper Series 2037, The World Bank.
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